Economic Saboteurs and Dullards

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–Here’s a question you might be able to help out with as we start another week of reckoning: who made Ross Garnaut the Rasputin of Canberra? We’ve been in Australia for five years now and still can’t figure out how an economist has managed to make himself a catch-all advisor on the mining industry and climate change. The common element to both issues: raising taxes in order to redistribute income.

–Back to rent-seeking bureaucrats and economic interventionism in a moment. What about financial markets? Well, despite the best efforts of Mother Nature and Geopolitics, stocks are holding their own. And judging by the volatility index published by the ASX, there is not a lot of “fear” in the market at the moment.

vix_chart.gif

–The trouble with the VIX is that it’s a lagging indicator. It always spikes after a crisis to reflect the increased premiums on put options as hedges/insurance against more losses. Though we’re not a heart surgeon, we imagine using the VIX to predict volatility is like using an EKG during a heart attack to tell a man he’s having a heart attack: by the time it tells you what you need to be worried about, it’s too late.

–Of course the VIX isn’t designed to predict things like tsunamis or revolutions. It tells you how investors react to those events (usually defensively). But investors don’t appear to be defensive at all at the moment. Not only has the VIX receded, but the Aussie dollar—the quintessential “risk” currency—is at a post-float high against the U.S. dollar. “There’s low volatility, a stable VIX index and equities are doing well, so you have to be long on the highest-yielding currency you can find,” ANZ’s Tony Allen tells Bloomberg.

–The low volatility may change, at least for a day. Newswires report another earthquake off Japan’s north-east coast this morning. It was smaller than the 9.0 quake on March 18th. But a tsunami warning was issued.

–The bigger question here is whether you can afford to be reactive to events. The market—backed by bullish fund managers and a steady tide of compulsory money—is not sending any distress signals. Mind you, it doesn’t send out engraved invitations to buy when stocks are cheap either.

–Central bankers are like Terminators (cybernetic organisms). Except, instead of destroying their programmed human targets, they destroy normal prices and undermine values (investment and otherwise). This is why Sarah Connor would have made a good investment advisor with her motto, “No one is ever safe.” Or more to the point, no investment is ever safe.

–Our view this Monday is Jeremy Cooper’s view: avoid complacency.  Cooper warned about Aussie banks that still rely on wholesale funding in an article in last week’s Financial Review. “Its been fashionable for awhile in this country to say the Yanks have blown themselves up and China’s now going to be in the ascendancy. We’ve been patting ourselves on the back about our regulatory system,” he said.

–“Something we did learn out of the [Global Financial] crisis is there is a systemic issue here that hasn’t been fixed. It’s how the banks fund themselves and their reliance on wholesale funding that hasn’t been addressed,” he added. Cooper pointed that Aussie banks have borrowed abroad to fund Australia’s domestic spending and investing (mostly on housing). This borrowing is what permits Australia to run a pretty regular current account deficit.

–Or, if we may put it this way, Australia’s housing bubble is built with borrowed money and if the banks don’t find another source of funds (cheap, preferably) already unaffordable house prices will now become even more unaffordable. They may even fall.

–Enter stage right our hero Covered Bonds. If you recall, covered bonds are a type of security sold by a bank to an investor and collateralised by the depositor’s money. Instead of promising some other security as collateral for investor capital, the bank promises your money.

–Treasurer Wayne Swan’s banking overhaul proposes to let banks sell covered bonds up to a limit of 8% of their total assets. According to APRA, the banking system has just over $1.8 trillion in assets. That means Aussie banks could sell about $145 billion in covered bonds, in aggregate. More money for the housing market, anyone?
–The banks like the deal not because it favours creditors over depositors in a bank failure (although it does), but because it gives them a new pool of cash to lend. Because the bonds are secured by depositors (your money) the interest rates on them (what the bank pays investors) is lower than similar bonds secured by nothing at all.

–So the bank pays less. And this, the bankers assure us, means the banks can continue extending credit to Australian businesses and home buyers. It’s  win-win, which means no one loses.

–It IS a bit problematic that the covered bond limit is a percentage of assets and not deposits. In the unlikely event of the total collapse of the Australian housing market and the wipe-out of banks, the value of bank assets would fall, mostly because residential and commercial mortgages make up such a large percentage of bank assets. That means the covered bonds issued would be a larger percentage of liquid bank assets (deposits) than the 8% suggests.

–But don’t worry. Even if the banks’ creditors had access to your deposits ahead of you, the government is the ultimate guarantor of bank deposits via the new Financial Claims Scheme. And even though that scheme isn’t funded yet, we imagine the government can always sell its own bonds to the Reserve Bank in order to raise the cash to pay the depositors of the failed Aussie bank.

–What’s that? What happens if the Reserve Bank doesn’t have the cash? Not a problem! It will just print more. And yes, that will reduce the value of everyone else’s savings. But at least the banks will have been able to keep the housing boom going just a little bit longer, even if has the potential to wipe out risk-averse savers.

–Someone has to pay for a credit boom, you know. And it’s not going to be the bankers or the regulators who make them possible. Speaking of regulators, will someone please explain to us the exalted status Ross Garnaut seems to have in Australian public life?

–Mind you, we have nothing against the guy. He’s probably amiable and well-intentioned enough. But it’s the well-intentioned do-gooding so-called “public servants” you have to worry about the most. In the name of the “public good,” they tend to be the most willing to trash economic and personal liberty.

–In Garnaut’s case, he keeps popping up with “expert” papers on climate change. He’s an economist by training and a climate scientist by self-belief. Of course you don’t have to have a Ph.D to know what you’re talking about. Our modern society is too respectful of credentials and not respectful enough of common sense.  We won’t hold it against Dr. Garnaut that he’s an economist holding forth on the climate.

–After all, we’re a financial scribe with a degree in liberal arts holding forth on the nonsense of Dr. Garnaut’s views. But as a literature major, we also object to his torturous use of the English language. Take this example where he explains why power companies are not entitled to compensation as a result of the carbon tax that he hopes will come into effect next July:

Any fall in asset value stemming from the internalisation of the carbon externality (through pricing carbon) creates no greater case for compensation than other government reforms to reduce other externalities, such as the introduction of measures to discourage smoking, control the use of asbestos or phase out lead in petrol.

–That is prose only an economist could love. And it’s thinking only a dullard or an economic saboteur could embrace. It is revealing, though. Garnaut is saying that when the government decides to intervene and arbitrarily raise prices in a market, it gets to decide who is eligible for compensation.

–This is not sound thinking. But it is, in its own way, logical. When the leader of a gang robs a bank, he gets to decide how the loot is distributed amongst the gang. Garnaut is predicting dire climate consequences without a carbon tax. He recently said, “I would now be tempted to say that views that temperatures and damage from a specified level of emissions over time will be larger than is suggested by the mainstream science are much more likely to be proven correct than those that embody the opposite expectations.”

–What he really means, we think, is this, “Me and the gang that has hired me to make this tax look urgent and respectable to you (mostly by snowing you under with how accomplished and important I am) are now certain that if we don’t tax carbon now the seas will rise and you’ll all drown. So shut up and pay up.”

–You do have to give the climate con gang credit where it’s due. They’ve correctly understood that the demographic challenge facing the Western world probably means a declining tax base from which to finance their Welfare Statist dreams. With that honey-pot tapped out, they need to find a new one, and right quick.

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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Comments

  1. Australian banks won’t need covered bonds if their domestic customers simply stop borrowing. Speaking of which, a first home buyers’ “strike” launched on March 15 has risen to the top of the Campaign Ideas Forum at GetUp! – http://is.gd/FNiegF .

    Gavin R. Putland
    March 28, 2011
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  2. Jeez, Gav… That should help bring rates down, too!~ :D

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  3. Does anyone know just how much Dr Garnaut gets paid by us to promote his thoughts of view?

    I still cannot see how his wild theory will work. Who will pay, who will benefit. I suspect that it will be me paying! And a group of over remunerated bureaucrats will benefit. Business will be hit for a six in trying to manage this with a heap of new costs to be paid and little prospect of recovery in the local market.

    Too bad.. so sad

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  4. “I would now be tempted to say that views that temperatures and damage from a specified level of emissions over time will be larger than is suggested by the mainstream science are much more likely to be proven correct than those that embody the opposite expectations.”

    I’m happy to do my bit – I’ll let the lawn grow really long thereby promoting more photosynthesis and using less fossil fuel – But I want a bonus rebate from the Greens for creating a nice environment for rats and brown snakes round the place.

    PS: Do I still get the full rebate if I burn off every 6 months or so to kill the vermin off? (Not the Greens – The other vermin I mean!) :)

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  5. Yes, a FHB Strike is timely, considering the rental situation: Sydney’s vacancy rate 1.4%, Canberra’s 0.6% and Melbourne 2.8%. Brisbane was 3%, but the floods have tightened the market somewhat.

    The suburb in which we have rentals is tighter than Sydney, where rents have “…grown on a compounded basis by 8.8% per annum for the last five years…” (AFR March 26 – 27, 2011, p.5.)

    It’s claimed that a fall in FHBs “…put more pressure on the rental market. ” If that’s true (and it seems likely) a FHB Strike, if well supported, is likely to increase rents; a case of ‘be-careful-what-
    you-wish-for’ if ever there was one… .

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  6. Wonderful stuff keep up the good work. Garnaut is wrong. Unfortunately he represents the politicised climate change faction who either have no idea or are set to profit from “green policies.

    Matt Farmer
    March 29, 2011
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  7. Comment by Gavin R. Putland on 28 March 2011:

    Australian banks won’t need covered bonds if their domestic customers simply stop borrowing. Speaking of which, a first home buyers’ “strike” launched on March 15 has risen to the top of the Campaign Ideas Forum at GetUp! – http://is.gd/FNiegF .

    Steven Keen is promoting the link on his forum and has supported it.

    Rental rates are approaching peak affordability as well so I would not be too concerned about any significant rises in rental rates.
    House prices do fall when people stop buying them.. There is some merit in “buyers” strike so to speak.

    Stillgotshoeson
    March 29, 2011
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  8. Soes: “I would not be too concerned about any significant rises in rental rates…” Nothing like mates’ rates, Shoes!~ :D

    http://www.perthnow.com.au/business/news/rba-may-start-cutting-rates-if-economy-outside-mining-doesnt-improve/story-e6frg2qu-1226029918965?from=public_rss

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  9. What did that yen intervention do for us? AUD is back to pre-intervention levels and USD is at record highs and QE hot money is running as never before.

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  10. Shoes, here is the value differential that eventually had me sign on (and stay away) to your “fully valued” line on Tap Oil.

    “Apache Energy and Tap Oil have been hit with a $158 million lawsuit by Alcoa, which claims a gas supply contract was breached when services were disrupted by the Varanus Island gas explosion in 2008.”

    Elsewhere the XEJ is the leading index recently but it is now time for me to blow off what’s left there.

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  11. Comment by Ross on 29 March 2011:

    Shoes, here is the value differential that eventually had me sign on (and stay away) to your “fully valued” line on Tap Oil.

    “Apache Energy and Tap Oil have been hit with a $158 million lawsuit by Alcoa, which claims a gas supply contract was breached when services were disrupted by the Varanus Island gas explosion in 2008.”

    Elsewhere the XEJ is the leading index recently but it is now time for me to blow off what’s left there.

    EEG (former IMP) and BOW are the only energy stocks I will retain.
    TAP and ROC have both been “fully” valued for some time and have had no exposure to them, not even on my watch lists.. better value to be had elsewhere.

    How goes the book publishing Ross?

    Stillgotshoeson
    March 29, 2011
    Reply
  12. @shoes, on the TAP, that was your advice to me some time ago I was feeding back and I ran with it after getting wind of the downstream compensation effects likely after the explosion.

    On the book, the publisher response is zilch. 4 down to date. I have been advised that I should look beyond Sydney based publishers if I am promoting a book that heralds a corporatist styled redundancy for the city of Sydney, even if it is sympathetically rendered. An undercurrent of universal Deism is also a handicap. Melbourne based publishers or agents may be my next turn. The chances of success aren’t high but we keep stepping up…

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  13. “Steven Keen is promoting the link on his forum and has supported it.”

    Well, it’s going to be a great success, then!~ :D :D :D

    (Isn’t anyone, apart from me, going to give Gavin’s comment a Thumbs Up and five Gold Stars??!~ )

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  14. Fully reinvesting in the Australian public, by way of 100% tax offsets is the only politically and economically sensible thing to do. A carbon tax thats revenue is completely used to offset income tax, is the cheapest and most effective way to reduce carbon emissions.

    THE CARBON TAX NEED NOT COST 1c.
    Imagine if the average Australian was slugged an extra $300/yr in energy costs by way of a carbon tax. Unacceptable right? But what if the same average Australian received a reduction in personal income tax of $300/yr? Cost to the average Australian or Australian business $0; Benefit to bureaucrats and businesses with the ear of their local member $0. Politically it’s perfect, economically it is as well!

    IF NO ONE PAYS IT DOESN’T ACHEIVE ANYTHING?
    Of course it does, the key is that NO one is average. People with a large carbon footprint are worse off, and people with a below average carbon footprint are actually BETTER off! Financially! Those people paying more, then have a financial incentive to reduce their emissions, which is the complete and should be entire aim of a carbon tax.

    I admit that below the surface there are a whole range of issues with this idea; importers v. exporters, families v. small households, and so on. None of these are game changers though, as long as the policy makers hold with the aim of penalising those with an above average carbon footprint.

    What I don’t understand about this whole debate is that it is so simple. Meanwhile, the Liberal alternative (and probably the bulk of Labors too) is to go out and spend money, where will this money be coming from? Doesn’t all new spending come from increased revenue, i.e. taxes?

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  15. Comment by Ross on 29 March 2011:

    @shoes, on the TAP, that was your advice to me some time ago I was feeding back and I ran with it after getting wind of the downstream compensation effects likely after the explosion

    About a year or so ago I think… Feb/March last year

    Stillgotshoeson
    March 29, 2011
    Reply
  16. Joe, I don’t follow.
    The electricity producer pays an extra $300 to produce power for me. They will pass this cost on to me plus a small margin.
    The government kindly gives me an extra $300 in tax savings.
    Am I missing something?
    1. How will this help reduce the carbon footprint? I really cannot see this changing the behavior or attitude of the end user to any significant extent.
    2. Who is going to pay for the cost of administering this – more rules and red tape and penalties and ……
    3. Will this be like the GST.. we had to simplify the complex sales tax rules .. what have we got? Ten years on and there are still so many grey areas!
    4. This will not stop climate change!! Climate change has been with the planet since the beginning of time and will be there long after man, as a species, is long forgotten.

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  17. @trested
    >>1. How will this help reduce [my] carbon footprint?
    Because you have a financial incentive do so. Instead of the average Australian, think of the big carbon footprint Australian. He’s energy costs go up by say $500/yr but he still only gets $300/yr in reduced income tax. He has a $200/yr incentive to reduce his emissions. Pretty significant.

    >>2. Who is going to pay for the cost of administering this?
    The administration cost is tiny. A flat tax is applied at the earliest possible point. There are not too many electricty plants to be a burden and petrol excises already exist.
    At the other end, reducing income tax is easily done by incresing the tax-free threshold and reducing corporate income tax. Extraordinarily cheap to administer.

    >>3. Will this be like the GST? There are still so many grey areas!
    No. Petrol and electricty production are taxed, all the revenue goes into the pay packets of the Australian public. There’s nothing grey about it. There are some issues, importers v. exporters, etc, but none of that changes the general policy.

    >>4. This will not stop climate change!!
    No, of course not. However, consider the Liberals direct action alternative. They intend to take our tax dollars and give it to their mates in the wind, oil, coal, or solar industries and anybody else who’s already rich enough to have their ear. At least this way you get to choose who (if anyone at all, remembering 50% of Australians will be financially better off) gets your money.

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  18. Joe,
    I have an incentive now regarding electricity costs. Why do I need a carbon tax and a tax reduction to make me change?

    Administration costs will be large. Look what has happened to the cost of water in SE Qld. There will be more than just power plants involved. AND there will be the internal costs – audits, record keeping etc.

    Do you wanta make a bet that all the revenue will go into the pay packets of the Australian Public. Define revenue! Gross or net. What will be creamed off the the government. What will the salary package of the CEO and other key management team members be.

    If it will not stop climate change (not just in Australia) then why bother?

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  19. Joe, Although we dont have any concrete figures yet, It is very dangerous to assume anything. I am going to use myself as an example.
    I use between 16-18t of CO2 on power/year. With a Carbon price of between $25-$40 that is $400 to $720. Now fracture in petrol/gas/water/food because everything generates CO2, so maybe add 5% to cost of everything. For me that’s an extra $1200. Now add a interest rate hikes because this will flow through to inflation. Say 0.25%. That’s another $1000. OK so now we are at nearly $3,000+ GST which is $3300. For me to generate an extra $3.3k, that means I need to find a second job. And also means I need to earn $5,000 to pay for it with tax.

    Other alternative is the Govt give me a tax rebate. Do I trust the Govt to pay the extra increases “Down the Chain” price increases? NO, I dont. They might give use the rebate on power, but as my example above, thats chicken feed.

    Now if U take Vic only (News released a Victoria on Welfare story last week, so can use those figures), it says 1.2M income support, 830k aged pensions. So we have 2M people in Vic rely on the Govt to live. The population of Vic is about 5.5M. If we take that as an Avg, Australia has about 8M people on welfare. If U trust the Govt and all low income people will be rebated, and use say $1K each (Because income tax reduction will not help these people) Thats $1B, now take the cost of income tax reduction for middle earners, U can see the numbers cant add up. Everybody can’t be rebated with cash or tax reduction.
    The Govt have made it clear many times over the last 3 years. If you family income is over $150K, you lose. (ie 2 x $75k). Considering the avg wage is $55k, you are classified as a high income worker even know your only 35% over the avg)(And once tax is taken out your $75k is closer to $59k anyway) I would fully expect this govt will cut all benefits off for families earning over $150k, so thats who will really pay for this.
    But in the end, we will all pay. I dont like the fact the Govt by way of a Carbon Tax, makes a majority of the population totally reliant on the State to keep its food cold, house warm, lights on. Just start pulling the strings and U will get the population to do anything. This is a very dangerous situation for every Australian.
    (Sorry for the long post:(

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  20. Sorry made a little mistake.
    My $1B cost should have been $8B

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  21. @Tom.
    I don’t want to dispute your figures because you have a lot of them and the calculations aren’t all that clear (probably my fault).

    However, let’s look at you personally. Australian’s on average produce 18t of CO2/yr. You’re using that just on heating/cooling/lighting your house!? $1200 on petrol/gas/water/food everything else @ $30/tn is an additional 40tn!

    You use (18+40) 58/tn of carbon and Australia’s per capita usage is 18!! If any policy to reduce carbon is to be effective you need to pay. If you choose to get a second job instead of reducing your emmissions that’s your choice.

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  22. @joe
    Your actually not far off. I used an online calculator, and with air travel (6 flights/y) come in at 57. (Sure if U live inner city, grow veges, bike to work, and live in the dark and dont fly anywhere, it will be less)
    House ones were right at 18t, but the others I think I was a little out.(But U cant work backwards from the increase to work out the CO2, because not all the increases will be because of a CT, there will be added costs involved).
    But it doesnt negate the fact if U add $25/t to $40/t, comes out at $1450 to $2320 without the hit to inflation and interest rates.(for me 0.25%= $1000, 0.50%=$2000/y)

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  23. Now, now Mr. Denning. I think you’re being a bit hard on Ross Garnaut. His statements, when I hear them, seem reasoned and measured. He’s taken quite a long time to understand climate science, which is not his field of expertise. I think he’s done well.

    What this debate boils down to is whether we should charge a fee for pollution. It’s the old tragedy of the commons on a global scale. Should it be free of cost to emit into the air, or dump into the ocean, particulary as it becomes clear that the dumping causes problems for, and material damage to others? As a consensus builds accepting that the present arrangement is unjust and requires correction, the counter argument builds as well. So much complaint and horror concerning the cost of electricity. So much smokescreen concerning global warming science. The public has got hopelessly confused. (Which was the objective of course.)

    Which leads me to an Afghanistan war comparison. In Afghanistan we have western powers with the ability to intercept, locate and jam any communication, with complete air superiority, night vision, drones, and in general possessing equipment & munitions of the most advanced type in every area. Complete superiority. Ranged against them are tough, religeously driven men who cannot match the western forces in direct combat, but plant bombs and retreat away. Using the cheap and comparatively low-tech weapons they can bring to the task, they have locked up billions of dollars per annum of western effort.

    In climate science, the serious researchers are the equivalent of the western forces, now possibly losing the public debate to a rag-tag army of doubters. Sadly, it turns out that cash for comment is not confined to talkback radio announcers, but extends to people holding BSc degrees and even higher! Given that many millions of people hold science degrees and could therefore, loosely perhaps, pretend to the decription “scientist” despite doing no research, it can hardly surprise that some are available to accept fees and write books to oppose the generally accepted scientific consensus. In particular, it beggars belief that the same scientists who were able to disprove the smoking & cancer linkage, are many years later (apparently!) at the forefront of atmospheric research and able to dispute global warming’s link to CO2. Such expertise has been generated by years of sitting in a Washingon beltway lobbying company!

    The argument in climate science, like the war in Afghanistan is asymetric. A nonsense (low cost) objection sourced from a mis-interpretation of data by an academic at a backwater university can take a lot of work to counter by systematically back-tracking, checking sources of data, errors in logic and writing a rebuttal. What serious academic wants to take on such activity? It’s the equivalent of taking out the garbage, and a waste of lifespan. The western forces have to patrol Afghan roads, but scientists do not have to defend science, so much mendacious climate nonsense goes uncountered and so stands as valid in the public mind. Thus may truth lose out in the public space if not in academia.

    And so Mr. Denning appears not to believe in global warming. Sad, but what can you, or I, or even, (bless his cotton socks), Ross Garnault do about it? Probably nothing.

    Oh well.

    But nature doesn’t care about this debate. Physics and chemistry will carry on, ignoring right-wing “think tanks”.

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  24. @mark

    “What this debate boils down to is whether we should charge a fee for pollution.”

    Actually, I think the dispute most have is really whether CO2 is pollution or not. And then the next dispute is whether we should be taxed on it, especially if it is unproven. And the final debate is, why should we tax these emissions (‘pollution’) when countries that emit vastly more total emissions are not doing the same.

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  25. According to Australian scientist Dr Evans the big money is in supporting AGW.

    “I DEVOTED six years to carbon accounting, building models for the Australian Greenhouse Office. I am the rocket scientist who wrote the carbon accounting model (FullCAM) that measures Australia’s compliance with the Kyoto Protocol, in the land use change and forestry sector.

    FullCAM models carbon flows in plants, mulch, debris, soils and agricultural products, using inputs such as climate data, plant physiology and satellite data. I’ve been following the global warming debate closely for years.

    When I started that job in 1999 the evidence that carbon emissions caused global warming seemed pretty good: CO2 is a greenhouse gas, the old ice core data, no other suspects.

    The evidence was not conclusive, but why wait until we were certain when it appeared we needed to act quickly? Soon government and the scientific community were working together and lots of science research jobs were created. We scientists had political support, the ear of government, big budgets, and we felt fairly important and useful (well, I did anyway). It was great. We were working to save the planet.

    But since 1999 new evidence has seriously weakened the case that carbon emissions are the main cause of global warming, and by 2007 the evidence was pretty conclusive that carbon played only a minor role and was not the main cause of the recent global warming. As Lord Keynes famously said, “When the facts change, I change my mind. What do you do, sir?””

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  26. Greenhouse lies go back to the very beginning. The greenhouse (structure preventing heat loss via convection) analogy is not even applicable as i said once before.

    Then money just corrupted science. And apparently still is.

    http://www.climategate.com/top-climatologist-openly-breaks-with-climategate-conspirators

    http://www.climategate.com/glaciergate-another-scientist-rats-on-the-ipcc-fraudulent-ways

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  27. http://www.theage.com.au/victoria/bleak-houses-debt-welfare-crisis-in-the-suburbs-20110402-1csmn.html

    Better get this carbon tax in so these people will be better of financially due to the governments financial compensation package that will be linked to the carbon price/ETS……..

    Stillgotshoeson
    April 3, 2011
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  28. In a way the carbon tax will do to Australia what the European Union did for Germany. That is to create a reason for an unelected and undemocratic beurocracy to siphon off funds from the economy and channel it who-knows-where and who-knows-why. In the confusion everybody will just pay up, being forced to trust the unknown people handling the money to do so honestly and in the best interests of the nation. And just like the European Union, a mass breach of national sovereignty which was neither spontaneous nor a natural progression driven by free markets, the carbon tax will likewise be an ideological imposition on economics, resulting in a less efficient and more vulnerable situation.

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  29. Shoes: “I would not be too concerned about any significant rises in rental rates…”

    …but…. from your link….

    “…Michael Perusco said there had been an alarming rise in the number of low to middle-income women getting pushed out of the rental market due to rent increases…”

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  30. Would anyone here on the pro side of man made carbon dioxide causation for climate change have any data based refutation of the Evans contention that the ice core data points to historical climate change occuring well before carbon dioxide build up (climate change causation not being from carbon dioxide build up but the latter being a consequence of it)?

    Scientists do have a poor record, with prognoses more likely to be 100% wrong than 100% right when hypothesising theory on complex systems without first being able to accurately model measured and controlled systemic outcomes.

    For mine this validates that the scepticism of consensus scientific opinion remains more empirically valid than belief. More specifically this relates to the issue of causation that would have scientific community led intervention measures that in turn promise empowerment and funding of scientific inquiry for that elite community rthat would otherwise be denied.

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  31. They talk about using the money from a carbon tax to bring tax relief for low and middle class taxpayers. All fine and dandy whilst you have a job…..

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  32. How else can Gold (note cap) reach its zenith unless we bring the economy to its knees, Don?! Unemployment, a crashed sharemarket, zero interest rates, paper money scorched, property down the gurgler… it’s all necessary for PMs to achieve a Splendid New Age. :D

    Astonishing how many goldbugs seem to vociferously oppose this new tax… .
    It may herald the Armageddon for which we strive and spruik!~ ;)

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  33. Comment by Ross on 3 April 2011:

    Scientists do have a poor record, with prognoses more likely to be 100% wrong than 100% right when hypothesising theory on complex systems without first being able to accurately model measured and controlled systemic outcomes.

    For mine this validates that the scepticism of consensus scientific opinion remains more empirically valid than belief.

    100% Agree Ross

    Stillgotshoeson
    April 3, 2011
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  34. BP I think it’s possible that if the PMs do help anyone maintain or increase their wealth then (a) Very few average Joes will get involved…they still aren’t in fact the public are selling into the bubble highs they perceive. I still cannot find anyone who goes along with my whacky gold ideas outside of internet venues.
    and (b) even after the fact the same people will not even know it happened.

    Because I believe the changes will occur in real terms which people won’t generally perceive and nominal values will be transformed greatly through inflation between now and then.
    I’ll just wait for my money tsunami to arrive now thanks ;)

    Reply
  35. It’s curious, though, Lachlan. I was reading a post recently which stated that if one had purchased an ounce of Gold back in early 2009, one would have made just $35 per year (less tax, of course.) With inflation at around 3% per annum, Gold doesn’t look all that shiny in the last two years… .

    Carbon taxes? I’m more-and-more into conspiracy theories. How likely might it be that DRA and MMA are conspiring with Julia and Bob, to bring Australia to its knees, crash the economy and force a Gold bubble to $6K?!!

    Investment tip: Baked beans, tissues and used caravans.
    Gotta be winners…!~ :D

    Reply
  36. Not about conspiracy theories but, coming from Labour/Greens the tax would be used as a step towards their ultimate Troskyite/Socialist agenda with its single/united world government, currency and nanny-state social agenda, by whatever means necessary. These ideologies are not dead, as much as they are unmentioned. But if you still want to go on thinking this is all about saving the planet from soot, then go ahead.

    Reply
  37. Steve, looks like we got out of the bank’s grasp with perfect timing. Not a big problem for people with no debts who collect rent, except selling for profit will be next to impossible for a while.

    Reply
  38. Agreed the AUD has kept our gold quiet BP. In a portfolio of currencies I viewed recently it was the best performer. I see pullbacks in AUDUSD only within an up-trending market there such as for eg sometime over next 1-9 months a sharp dip to 89 before a stronger run-up. It doesn’t matter how bad it gets here I’m sure most will be worse off. We have a small pop. and lots of resources.
    On the bright side of gold I think its a good buy now with the AUD so strong.

    Reply
  39. HaHa…! You weren’t sucked-in, were you, Dan?
    Article written by Lirpa Loof, you’ll notice?!~ :D

    Reply
  40. Dan / Lachlan, you may have noticed how quietly Kris and Dan have gone along with Jools’ tax…. no real dissent at all. My theory? Either they’re Closet Greens or actually in bed with the tax. May even have given Gillard the blueprint… or ‘incepted’ it. Really good doco about that recently by that Italian fella, Deek-something… .

    Now, think about it. This damned economy has been almost bullet-proof for six years our heroes have been calling crash.

    The Master Plan calls for a masterly intervention to ruin Oz.
    The Carbon Tax is the answer!
    I’m buying GOLD!!~ ;)

    Biker Pete
    April 3, 2011
    Reply
  41. Nice one. Every day is a fools day for some.

    Reply
  42. The so-called bullet-proofness of our economy more recently has come at enormous cost (yet to be realised), from being debt free to… how many hundred billion is our sovereign debt now? Basically they bailed the banks here too through housing, the difference being that here it was more or less successful in the short/medium term.

    But is the sovereign debt sustainable? I don’t know, but maybe it was okay because we have the ability as a nation to pay it back by basically giving away our rocks, and in the near future, taxing our farts,

    Reply
  43. Comment by Lachlan on 3 April 2011:

    Agreed the AUD has kept our gold quiet BP. In a portfolio of currencies I viewed recently it was the best performer. I see pullbacks in AUDUSD only within an up-trending market there such as for eg sometime over next 1-9 months a sharp dip to 89 before a stronger run-up. It doesn’t matter how bad it gets here I’m sure most will be worse off. We have a small pop. and lots of resources.
    On the bright side of gold I think its a good buy now with the AUD so strong.

    Gold may have a pull back short term before the next run up.
    Feeling more and more confident about my Bolivian Gold play…Going to break my 5% rule and up my stake even more.. Feel very confident they will be a cherished 10 bagger over the next 24 months.

    QEIII and Europe Interest rates will have a bearing on our dollars movement.. May/June or late 2011 I would expect most likely timing.

    Stillgotshoeson
    April 3, 2011
    Reply
  44. Don’t feel too badly about being taken in by Lirpa Loof, Dan.
    Look how excited poor Steve was… .

    Even funnier AFJ over at MMA, apparently.
    Some pesky prograndma apparently fed them the Alchemist’s Wirus,
    which transforms grey dross stars into Gold Stars… and vice-versa.
    This means that if you hit a Thumbs-Up, within a few minutes it goes Thumbs
    Down. Worse still, Gold Stars are transformed into dross! O the Horrorscope!

    All kinds of theories about how this has happened, but, like most realities,
    the editors have refrained from comment… .

    Reply
  45. I ignore the ratings and just read the comments.

    Reply
  46. Actually the COMMENTS are the funniest part!~
    (Especially today’s…! :D )

    Reply
  47. @Lachlan Maximus are doing a Share Purchase Plan @.017 Going to buy $5000 worth under the SPP.. Options are $2500, $5000 or $15000. Figured I would take the middle option. Expecting drill results from one of their tenements soon.

    HAW had a big move on Friday..50% Might be worth a look for you. (Still under 2 cents) may pull back a little.

    Stillgotshoeson
    April 3, 2011
    Reply
  48. Good one Shoes I’ll look into both….looking for metal and paper next few weeks.
    Checked FMLs other night and still looking good for a shot higher imo .
    I think the markets will resolve themselves to the upside here rather than lower after last weeks moves. Silver poised and aud already leading up but maybe worst case short term a continued grind sideways.
    I’ve been pleased with some drill results from a number of my smaller punts recently..who said all the gold was gone ;)

    Reply
  49. was hoping for some some NCM at 33.50 last month or so but not so lucky there….will wait, its a good one to accumulate on dips.

    Reply
  50. Comment by Lachlan on 3 April 2011:

    Checked FMLs other night and still looking good for a shot higher imo .

    3rd mine starts (well should) this month and drill results for trasure island should be in soon as well.. both these should give the share price a little boost..

    11 to 12 cents hopefully.

    Comment by Lachlan on 3 April 2011:

    was hoping for some some NCM at 33.50 last month or so but not so lucky there….will wait, its a good one to accumulate on dips.

    Crap dividends for such a high price.. agree with the worth buying on dips.
    SBM have recovered from there drop down to $1.85 or so..
    Maybe a few people that read here liked my last assesment of them when I mentioned them to you :) Up above $2.20 last time I looked.. Still regard tham as one of the best mid tiers available.. My fundamental analysis puts them around $3.30 to $3.50….. Have read other reports that give em in the high 3’s and low 4’s even.. I like em, not that much though ;) Gold breaks $2kAUD then over 4 is a fair value but not yet.

    Stillgotshoeson
    April 3, 2011
    Reply
  51. ” Crap dividends” true. Know any PMs or copper plays with fair yields Shoes?

    Reply
  52. OZL will be voting on a capital return of 12 cents soon…. not sure when the record date will be applicable. Yeild is under 5% (over for me cause I got em at $1.05)

    Have a couple of junior copper plays on my list 1 I like a lot and have bought and sold a few times is AVB….. Last sold them at 16.5 Announcement with Vale on the Iron Ore deposits is pending.

    Stillgotshoeson
    April 3, 2011
    Reply
  53. My Dad is an AVB holder and OZL for a long time too. I like AVB at 9.5-10c from where I think they will have a bounce or rally.

    Reply
  54. Dan: “Not about conspiracy theories but, coming from Labour/Greens the tax would be used as a step towards their ultimate Troskyite/Socialist agenda with its single/united world government…”

    Trying to figure out how a Brit political party figures in all this Dan, but meanwhile it looks like that April Fool Alchemist’s Wirus has down-rated all of Money Morning’s daily spruiks, right back to March 1st.

    Silence from His Omnipotence… . :D

    Reply
  55. Comment by mark on 2 April 2011: You complain that it is not fair that someone should be able to pick small holes in a scientific position because it is too hard to defend the position. Sorry my friend but that is the nature of science. It’s the small holes that do tend to put a theory in doubt and eventually see it replaced. The stakeholders in shaky positions usually hate that and work pretty hard to defend it. Your rhetoric is lame, your science worse.

    Reply
  56. Well put Dan. It seems team catastrafaria are particularly bad at butchering the queens english.
    Wasn’t the advisor you speak of also on the board of Lihir Gold as well?

    Reply
  57. It’s only a catastrophe if you’re on the losing side.

    Reply
  58. was this the article I have been looking forward to from DRA on the makeup of the RBA? still like to know who owns it.

    I can get DRA to believe in AGW. Just get Abott to come on telly saying that because of the climate ‘crisis’ all welfare will be abolished, no minimum wage, all poor kids out planting trees all day etc. corporate taxes to zero (just confirming the norm as it stands today).

    know that the PTB play both sides of the agenda (ie Libya) most of the time.
    those bods need to be sorted out before anyone is in a position to know the truth of matters, and their proportionality methinks. who’s gunna do that? serendipity, the limits of hubris, an awakenening of mankind, alternative media, and probably, Mother Nature herself.

    and on common sense, John Raulston Saul’s Voltaire’s Bastard’s ,the Dictatorship of Reason in the West (and the demise of common sense). Oldie now but a goody.

    http://en.wikipedia.org/wiki/John_Ralston_Saul#Voltaire.27s_Bastards.2C_The_Doubter.27s_Companion_and_The_Unconscious_Civilization

    my investment for today: finally learning how to sharpen a brush cutter blade, used half the effort and half the petrol (so petrol can double in price for all I care).

    Reply
  59. peterg: “I have been looking forward to from DRA on the makeup of the RBA…”

    Glenn uses Revlon. Exclusive contract, I believe.
    Not sure about the others, mate.

    Reply
  60. Today’s the 4th Biker – So Congrats! (Though the thought did cross my mind you maybe became debt free on the 2nd? Which just means I’m belated in my congrats like with your b’day. :D )

    Revlon hey? And here was me thinking the poor bloke must be on chemo! Thanks for the tip – I’ll try Sunlight Soap instead! ;)

    Reply
  61. Thanks, but it’s a little premature, Ned. I’m retired, waiting for my Super payout. I’ll be overseas by the time a Mortgage Burning Party can be organised… .

    A nice unexpected surprise was a large farewell payout on my actual birthday. Knocked me over. Our property sale went through the same week. We figured a 50-game Lotto ticket might be appropriate.
    Never seen so few winning numbers! :D

    Still can’t fault the retirement plan. Nor could our bank manager.
    It will be interesting to see how my tax situation (totally) changes.
    OK to run this stuff in theory, but it’s a more complicated mix now.
    It may pay us to amp the missus’ SalPack back to the max $50K in 2012.

    Sunlight soap? Mum scrubbed my mouth out with Sunlight for calling my little brother a ‘little sod’* once. Can’t see a block of it without gagging… !

    * How’s a kid to decipher the deviance of adult lingo at nine-years-of-age,
    for Krissake?!~ ;)

    Biker Pete
    April 4, 2011
    Reply
  62. “Sunlight soap? Mum scrubbed my mouth out with Sunlight” – Just one more thing we have in common apparently then mate! :D

    But yep, cheers; And enjoy retirement – While looking forward to becoming totally debt free rolling out as part of it then I guess … :)

    Lotto tickets??? Jeez mate, haven’t you ever heard of BULLION or STOCKS or CASINOS!!! ;)

    Reply
  63. My mother never scrubbed my mouth out with sunlight soap…

    Reply
  64. Dan: “Not about conspiracy theories but, coming from Labour/Greens the tax would be used as a step towards their ultimate Troskyite/Socialist agenda with its single/united world government…”

    “Socialist agenda”, you would know all about socialist agendas wouldn’t you Biker,
    After all I am the one funding your negative gearing,
    then you can flog all your Investment properties off to me at 9/10 time the average yearly income when you paid 2/3 times yearly income for them back in the day,
    that wouldn’t be called arr umm socialism would it now????

    Reply
  65. Steve: “My mother never scrubbed my mouth out with sunlight soap…”

    I’d have thought that patently obvious, mate! :D

    “I am the one funding your negative gearing…”

    We don’t _have_ anything negatively-geared, Steve. (Sorry!)
    Within a week or two, in fact, we’ll have no debt at all.
    Oh and a fair whack of that other worthless folding stuff.
    There’s a good chance my kids will be contributing to your
    OAP in a few years, though.

    Doubt you’d be interested in our WA stuff, Steve.
    You’re anchored in Sydney for life, mate!~ ;)

    Reply
  66. Ever thought of getting a rigger’s ticket Steve? :

    “TRAVIS Marks, 24 and with no university degree, is hitting pay dirt as the mining bonanza fuels demand for workers. Already making triple the country’s average salary, he expects to get even richer.

    ”With what’s going on in the industry, there’s lots of big jobs coming up,” said Marks, who earns $220,000 a year.”

    http://www.theage.com.au/business/mining-boom-fuels-wages-surge-20110401-1cruy.html

    Reply
  67. Have a very similar story to tell, Ned.

    Weekend before last we visited a warehouse where we buy venetian blinds.
    The 26 yo who usually handles all our orders explained he wouldn’t be there to see this order go through. On Monday he was starting with a mining company.

    Nine-day fortnights and $115K+ per year… nearly three times his current salary. Bused to and from his home…. and he gets a daily travelling allowance of $200 per week as a ‘bonus’!!!~

    Nice young bloke with no tertiary or trade qualifications at all.
    Already has a nice home in a good area, (FHOG / SE).
    OK, it’s not $220K, but it’s a big win. :D

    Biker Pete
    April 5, 2011
    Reply
  68. Never had the sunlight treatment but that certainly brings back memories. Do they still make it – been ages since I have seen it in the supermarket.

    Congratulations on your long planned for retirement Biker, quoting an 80’s philosopher:

    “I love it when a plan comes together.”

    :)

    Reply
  69. Thanks, Don. Very pleased it all worked out.
    The big lump sum was a complete surprise… and I figure someone upstairs must have fine-tuned it so that the money would appear in my account right on my birthday. Nice touch… .

    The next stage(s) will be interesting… and we’ll just have to learn how to ‘tweak’ the tax/super/sales/rents balance(s) each year, I guess.
    Have a feeling it will all change quite a bit annually.

    I was wrong on the CGT/Super window, BTW. Ideal if I sell off two more before 2nd April 2012. Thought I had until 30th June 2012.
    No panic. Should sell another one this financial year… .

    Biker Pete
    April 5, 2011
    Reply
  70. The Socialism I speak of (ie: social liberalism wrapped in a rigged-market-capitalism) has been coming for decades, in the form of tax bracket creep, inaccurate CPI (kept artificially low), changes to family law (guaranteed to keep at least 50% of people broke), the baby bonus and a heap of other “means tested” interventions which ultimately allow businesses and government to keep worker’s wages low, debts sky-high, and prevent higher income earners (the true and rapidly shrinking middle class such as professionals and small business) from rising into financial freedom. Their lot is to be corporatised and assimilated to the working classes. (The mining sector is a notable but temporary exception that is worth it if you can get a job there.)

    So good on you Biker and anyone else who has done so, for finding a path out of the faeculent future that awaits the majority – like a herd of cattle being milked dry. And cheers to everyone here who is trying to do the same.

    Reply
  71. I actually use sunlight soap, though not orally.

    Reply

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