We Reckon For a Living and So Do Our Readers

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Time for reader e-mail. Just a reminder, we are professional amateurs here at The Daily Reckoning. The list of things we don’t know is longer that the list of things we know. And the list of things we’d like to know is even longer than the list of things we don’t know. Plus, there are those “unknown unknowns,” out there, and we have no idea how long that list is.

But that’s what keeps us reckoning. And we hope that’s what keeps you reading. IN any case, we wanted to thank you for being such good correspondents. We appreciate your time, attention, sense of humour, and your willingness to indulge us as we try and figure out what’s going on the world and how to make our financial way in it. 

A reader writes about New South Shanghai:

Dan Denning,

Thank you for already ceding vast areas of Australia to China. This adds so much to your value as an economic commentator. The people of Australia will benefit so much from having our resources owned by China, India etc according to your world view, or should we just commit national suicide en masse to please you.

Tell you what, I am always willing to sell Sydney’s Harbour Bridge for a few trillion dollars. That should end China’s holdings of excess US dollars.

The issue of the availability of workers for remote areas relates more to relevant training of current workers and allowing market signals to operate by much higher wage rates so that workers shift to where demand is greatest. Imported cheap labour will do to Australia what the influx of Mexicans etc has done to the average Joe in the US, i.e. result in a stagnant or falling standard of living while the rich get richer.

Ever heard of transfer pricing in resource trading? This is basically what will happen when the mines are owned by non-Australian entities.

Your response is to keep Australian workers poor so that some one else (Chinese? International mine owners?) transfers the benefit of cheaper resources to another region while ramping up the price of the finished product (e.g. steel) on world markets. In any case the proportion of employees in the mining sector is only about 2% of the national total, so the actual numbers needed for the expansion of the mining sector are readily available in our cities, except that government and other services sectors are draining resources into wasteful social services programs.

I must say your constant ramping of the resources sector is now getting rather boring. There is no easy money to be made now, and there will be less as more mines are developed, thereby resulting in falling profit margins.

Somehow we have acquired a fool for a Prime Minister, who has not the slightest clue how badly he is damaging the future prospects of the majority of Australians by give away policies and so called Free Trade Agreements. No doubt Australia is fortunate in having its foreign policies developed in Washington, and we feel obliged to mimic your (i.e. US’s) ways so our future down hill slide is assured.

Joe M.

A reader writes on the recent blackouts and the layoffs at Blundstone Boots in Tasmania:

Australia is merely in the midst of repeating the California experience … if you want to forecast about electricity, mineral extraction, nanny-statism, foreign workers, manufacturing leaving, or anything else, just look backward at California 4-20 years ago. California used to be huge in oil and, of course, got its (Anglo-Saxon) start mining gold. Erstwhile electricity market gaming and rolling blackouts are still working their way through criminal prosecution. I could go on but, being a native born son past a half century old, it makes me mad.

Regards,

Eric R.

Still or sparkling? A reader asks about water, a question to which we haven’t found a satisfying investment answer…yet.

Hello,

Congratulations on a very finely written issue. I always enjoy your writing, even though I don’t fully understand all financial concepts. I have however understood a little an article in “The Rude Awakening” about Blue Gold or water investments and am quite intrigued. I would like to know more about that subject, but in Australian context. Is this something you can research and write about, and even advice on the best companies involved in water purification. I am considering investing.

Thanks
Nen

Another reader writes about Australia and the effects of globalisation:

I too am a yank businessman living in Australia for 28 years. Your comment, “None of this does any good for the folks who are out of a job this morning, of course. Globalisation is relentless in this respect. It bulldozes particular sentiments in the name of general prosperity. We’re just surprised it hasn’t happened more in Australia…yet. But it might,” — is too late. I have seen whole industries hollowed out in Australia over that period of time. And it is because the Australian’s categorically will not support local Australian businesses over price. Get used to it. The Australian will have to take low paying jobs in the service industry as they buy trinkets from China or have you not noticed there are few shops that make Australian made products?

Gordon P.

The Daily Reckoning
The Daily Reckoning offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, The Daily Reckoning delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors. Founded in 1999, The Daily Reckoning is published in 7 countries with a worldwide readership of almost 1 million people.
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