FEBRUARY 2015

Australia has run out of Luck  (Gerard Minak, December, 2014)

We can no more hope to end drug abuse by eliminating heroin than we could alter the suicide rate by outlawing high buildings or the sale of rope. (The Global Fix, 1987)

 

Global Finance. From Financial Big Bang to Global Black Hole.
Seldom is one lucky enough to hear a lucid description  of global financial matters, Nicole Foss on ABC1. Big Ideas provided this information. Foss, formerly with the Oxford Institute of Energy Studies and  now a Systems Analyst,  provided an insight into the global financial system teetering on the edge of a Black Hole.
The term ‘limits to growth’ and sustainability are commonly heard, the phrase now applies to global finance. Since the end of the Second World War  there has been a relentless rise  in industrialisation, economic activity and growth of the money supply. Inflation has increased as the money supply increased . Signs of financial insatiability are visible in the  bursting of the property bubble in Japan, China and the United States. As bubbles increase in size so too does inflation.
The financial system will be the first to fail as civilisation moves further into an unsustainable future. With the growth of the halcyon fifty years after the Second World War expanding markets  witnessed the growth of the money supply which ultimately morphed into paperless money and ultimately into almost incomprehensible credit instruments. Money has become almost an intangible commodity. There are now signs of an approaching financial crisis with the fall in the money supply and the quantitative easing employed by the United States, Japan and now the European Union to stimulate their flagging economies. Central Banks  have reduced interest rates to close to zero in order to stimulate productive investment. Globally the financial system is on the verge of a bust phase. Australians should take no comfort  from the Reserve Bank  decision to cut interest rates.
The 1980’s was the Big Bang when Great Britain and the United States deregulated the money markets, money freely moved round the world and the WTO and other trade/financial organisations precipitated  an enormous growth in the money supply. Cash decreased  as credit hyperinflation exploded and inflation increased. The stage has now been reached where 99% of the money supply is under collateralisation. This situation has promoted a deadly game of ‘musical chairs’ where only a few bankers, commercial organisations or traders holding debt are safe.
The world is on the verge of global deflation. Europe has entered that phase and the situation will become worse should Greece and Russia default on loans. In Greece  creditors will buy assets and Greeks will become tenants in their own country. The situation will precipitate a flight of capital to safe havens like Switzerland and the United States, this will knee jerk other nations to impose capital controls and so world trade will slow down.
The above situation will precipitate a savage revaluation of the housing markets. Price will no longer be the driver it will be affordability. Owners with large mortgages will see their equity plummet.
With deflation gaining momentum (as in Europe), unemployment will rise, wages and benefits will fall and taxes will rise as governments face a Black Hole. Behind this situation is the world of virtual money, creditors will force debtors to terminate their lines of credit, this may become impossible since there is no money supply. It was Iceland and Ireland that imploded few years ago owing debt.
In this new era of globalisation the money supply dried up and trade became dependent on letters of credit. In an environment of of virtual money and economic expansion there had to be increasing trust. With inflation falling and quantitative easing  increasing there is decreasing trust as debt increases. For many there is a Black Hole hardship ahead.

Carbon Crash – Solar Dawn
Following on from January a study on world energy, heard on ABC Big Ideas, shows the global energy industry to be in a parlous state.In the early days of coal and oil energy the industrial output was 1:100, in recent years the efficiency has fallen to 1:15 but in the near future the efficiency is slated to fall to 1:5 thus there is a desperate need for a low cost energy source. This declining efficiency may be in part due to the provision of ‘social’ energy to large population centres which use power for daily living where as in the early days of power it was used principally for industrial purposes. The early energy was used for productive enterprise and a productive workforce that contributed directly to GDP, now energy is supplied to vast and scattered population centres that do not have high positive economic impact.
In the January blog Gilding stated the “the future is upon us”, final comment by Foss mirrors this statement when she opined the world is a very different place to that of early industrial energy and cheap credit. New financial and energy systems are also upon us.

Australia from Commodity Boom  to Liquidity Crunch.
The Australian Industry Group made cooing noises on the strength of the NSW economy for 2013 as mainly derived from construction in the housing industry. This is in part a ‘ false dawn’ as this industry tends to churn the domestic money supply rather than producing export income unless overseas investors are encouraged  to purchase housing, unfortunately this will tend to inflate house prices and adversely affect Australian property buyers. This is a nice problem for Government.
With the end of the mining boom both Australia and Canada will suffer a liquidity squeeze. The Australian Government is already facing an income shortage hence the budget shenanigans. Australia’s weak position is due to
**a highly geared industry driven off shore by high input costs
**there is a high level of credit card debt,  $34 bn or $4400 per cardholder (ASIC)
**there is a huge housing bubble, for Sydney, Hong Kong and Vancouver, a significant correction is probable
For over ten years Australia has been to reliant on the resources industry, the Australian dollar has been grossly overvalued which has largely destroyed the manufacturing industry and driven it off shore. Successive Australian governments have not prepared the population for this economic downturn except latterly to intone the budget must be brought back to surplus which can only be accomplished  by squeezing health, social service and education.
In April 2014 the Australian Treasurer (RN Breakfast) indicated Government debt was $667 bn and rising while the budget deficit was $123 bn and rising, interest payments are around $23 bn per year and also rising. A comparison with OECD countries (IMF) shows Australia is not in bad shape, but alarm bells are ringing, government debt as a percentage of GDP is:- Australia 14, USA 88, UK 83, Greece 155, Germany 84.
An important source of Australia’s problems is the down turn in China’s economic activity. In recent years China has overbuilt on infrastructure and has accumulated a large natural resource inventory. There are vast multi story  housing blocks unsold and unoccupied. The Chinese industrial explosion has involved huge amount of credit, this will have to be repaid and represents a further source of instability in  the financial system. Australian woes are due too two numbers, Chinese boom generating growth  has fallen from plus 8% to round 3%

Reserve Bank Interest Rate Cut.
On the 3rd February it was concerning to hear Treasurer Hockey enthuse on the interest rate cut to 2.25% claiming this was good for home owners and small business. What the Treasurer omitted to say was that these historic low interest rates are indicative of a sluggish economy, rising unemployment and a tendency for capital flight out of Australia. The European  Union has low interest rates, high unemployment and is teetering on deflation. Government advice to Australians should be to tighten their belts and work harder than ever.
In late December 2014 Mr Gerard Minak, formerly Head of Market Strategy, Morgan Stanley, ( ABC  Business Program)  said that Australia has “run out of luck” following a staggering resources boom. Minak has forecast the serious risk of a recession for Australia in 2015, there will be  a lower dollar, lower interest rates, under performing equities and a significant fall in house prices. Why is it our politicians never call it as it is?

Dammed with Feint Praise
The saga has been humiliating for Australian democracy, the protagonists and the thinking public. The prequel to the Liberal spill motion in Canberra was characterised by a journalistic rabble attempting to elicit views and outcomes to leading  questions.
The spill motion was dealt with in a few moments, 60-40 in favour of Prime Minister Abbott, this was marginally above a censure motion, indeed it was a result dammed with faint praise.
The sequel, the 7.30 Report, Mr Abbott presented so poorly one could almost sympathise with him, he appeared to be grasping for answers, not directly responding to questions and indulging in pedestrian comment. It was telling  that he intended to be more collegial and inclusive with his ‘back bench’ but only in passing did he  mention the need to address his approval rating with the electorate.. Many viewers would have been disappointed with his measured and so very carefully chosen words. He was just not speaking as a confident national leader.
The day following the faint endorsement of Mr Abbott the Australian public endured an excruciating interview  with the Minister of Defence, Mr Andrews. The Minister was in Adelaide to discuss the $20?-$40?-$50? billion submarine program with the Australian Submarine Corporation. His press conference was marred  by ad nauseam repetitions that he was the Minister of Defence, the government approach to the project would be careful, cautious and methodical and contractor selection criteria would be a “competitive evaluation process” The Minister either would not or could not explain this process or how it varied from the normal tender process. Diction was hesitant and wooden as if a rigid  script controlled the proceedings, they were totally uninformative. It was dispiriting rendition of Major General Stanley, “I am the very model of a modern Major General”.`
A sequel a few days later was there would be a competitive tender involving Germany, Japan, France and Australia. The decision will be politicised. Having a defence agreement with Japan could bring Australia into international tension with China due to the dispute over the Senkaku (Japan) and Diaoyu (China) islands.There is also the issue of linking Japanese platforms to American armament systems.Both France and Germany (constructed over 100 submarines in recent years) have offered to build the submarines in Australia. The very complex tender process will continue to the end of 2015. Once built the Government has indicated there will be over 500 maintenance jobs created in South Australia.

Towards the Final Hour
My right eye is misbehaving, retinal corrosion according to the computer image. I am now on a crash course of eye drops to right this ocular wrong. The ultimatum from a MacQuarie Street specialist ‘get it fixed or go blind’.
A magic night of Faust at the Sydney Opera House. Goethe wrote the opera when he was 59 years old in 1808, he was already an ageing man who stated that “experiments in life had left him more unsatisfied”. The production illustrated love, lust,incomprehensible faith and mankind’s preoccupation with warfare, it fitted like a glove into the 21st century. One has to be an ageing male to relate to Faust and Goethe, another well fitting glove.

Rural Bliss
Great progress, it was two days of thinning eucalyptus trees on a steep boulder strewn slope disrupted by disintegrating branches, lethally pointed up turned tree stumps, bull ants lurking in camouflaged mounds and persistent flies that were drawn to facial spasaming orifices. Keeping a hot smoking chain saw on the trees rather than my legs and torso proved a great preoccupation. Such progress was only possible with the help of Sydney friends who toiled and sweated along side me.
I attended the local chapter of the Wild Dog Association AGM in Timor. Trends are not good and baiting is to be expanded. Dogs are becoming larger, they are hunting in bigger packs and they are now attacking and killing horses, as well as tearing apart but partially eating cattle and sheep. Tracking devices have established dogs make their lairs in quiet inaccessible areas from which they travel over twenty kilometres on hunting sorties, this give them an operating area of 1200 sq km. So far Animal Rights groups and the RSPCA have expressed a thunderous silence on this carnage.

Yemen, under the popular radar.
Another flash point for Middle East stability and safe passage for oil supplies has risen, Yemen controls the Bab al Mandab, the narrow strait to the Red Sea through which passes some 8% of global oil. Shi’ite Hoothi Muslims have been fighting the Sunni government for years, supported by Sunni Saudi Arabia. In the past few weeks Hoothi militia have forced the resignation of the President, Prime Minister and closed parliament. Saudi has now terminated support, famine and chaos are now facing Yemen. Western embassies have pulled out, only those of China and Russia remain. Despite American drone attacks Al Qaeda is well established, quixotically Al Qaeda regard the Hoothi as heretics and seek to destroy them. Yemen is now an out of control state controlling one of the world’s oil routes.

The Drug Trade
Official Australian Government policy in recent weeks has been a persistent request that two Australians due for execution in Indonesia be granted clemency. Portions of the Australian public have supported this request.
There are major issues swirling round these frantic pleas for mercy directed towards the Indonesian President. The dispiriting quote from the Global Fix meshes with a recent ABC Health Report program which suggested that drug addiction and death could be reduced if young and middle aged citizens had meaning and purpose to their lives. The Conversation (2013) has indicated that one third of heroin users are over 40 but there is a rising death rate in the 50 to 60 year olds which may be correlated with long term unemployment. The UNSW National Drug and Alcohol Research Centre has indicated there are 74,000 heroin users in Australia mainly in the 20 to 30 year age group due to a combination of unemployment and little possibility of a normal family life. The ABS reported 366 deaths from heroin based drugs in 2005.
What ever the out come of the Commonwealth of Australia plea to the Republic of Indonesia ( it has been a mistake to make the supplication too personal) the Australian Government is now obligated to wage an implacable and sustained war on the drug industry and to institute programs that lift young people and older unemployed out of the ‘slough of despond’ that drives them into drugs. Anything less than a concerted bipartisan political effort could be construed as a reluctance to address the real issues behind two Australians on death row in Bali.

Coins for Australia.
If this initiative gathers momentum like a rolling snowball Australia’s humiliation in SE Asia could be devastating. Prime Minister Abbott in pleading for mercy for two Australians on death row in Bali mentioned the one billion dollars of aid sent to Indonesia after the 2004 tsunami, it is reported this statement has enraged many Indonesians. There is now a grass roots move to collect ‘Coins for Australia’ and return the aid, support is now coming from Singapore, Malaysia and Hong Kong. Let us hope this terrible gaff does not enter the history books along side:
***the Wooden Horse at Troy in 1178 BC
*** the Romans at Masada in 73 BC
*** the fall of Singapore in 1942
*** the Iraq victory claim on the USS Abraham Lincoln in 2003.
The irony of ‘Coins for Australia’ will not be lost on the intelligentsia of SE Asia who realise better than many Australians that the Great South Land has a rising deficit problem, rising unemployment and a moribund manufacturing industry. Australia is in an invidious position.

Postscript.The Future
I am increasingly concerned, I yearn to express some meaningful global good news on mankind’s progress deeper into the Anthropocene, suggestions welcomed. Living between rising carbon dioxide in the aerial ocean and concentrating plastic in the terrestrial ocean I now wonder about the future of all great grand children, recently born who will be 75 in 2090, forty years past the Great Disruption so eloquently forecast by Paul Gilding. Faith will help us to endure, only Churchillian determination will solve the problem.

 

 

 

 

JANUARY 2015

Australia Day
Pearl Beach Australia Day 2015

The Winds of (Climate) Change. (Harold MacMillan)
Carbon Crash-Solar Dawn (Paul Gilding)

The Winds of Climate Change
Hand in hand New Year Festivity and ‘unnatural’ disaster moved through Australia. In the first days of 2015, roaring plus 40 degrees   winds sand blasted bush fires in the Adelaide Hills and western Victoria. Trawling through the disaster records over the past 30 years (1985-2015) indicates the first years of the 21st century require explanation and are a cause for concern. Natural Disasters in Australia (australia.gov.au) highlight terrible events in two fifteen year tranches. The information speaks for itself
* 1985-1999  (No significant bush fires)
1990              Wide spread floods in Qld and NSW
1991-95       Drought in north-east NSW and Qld
* 2000-2015
2002-07     Drought, severe and wide spread
2003            Fire storm, Canberra
2006            Cyclone Larry (Cat.5), north Qld
2009            Fire storm, Black Saturday, Vic
2010             Floods, Brisbane, Bundaberg and districts, Qld
2011            Floods, Vic.    Cyclone Yasi (Cat.5), north Qld
2013           Bush fire , Blue Mtns., NSW. Cyclone Oswold, Qld
2015            Fire storm, Adelaide Hills, SA and western Vic
These ‘unnatural’ disasters occurred along side El Nino events, rising sea surface temperature and  heat waves. Meteorological  data from 2000 show Australia has in the past twelve years suffered the highest prolonged summer temperatures since readings commenced. What does this apparent increasing ‘unnatural’ disaster frequency mean for Australia?

Carbon Crash—Solar Dawn ( ABC Science Show 5th January)
Once again the Australian Government is shown to be out of step  on global issues. Three experts on sustainable energy R Slaughter (Futurist), P Gilding (ex CEO Greenpeace) and S Holmes a Court (Community Energy) discussed renewable energy,  Australia’s damaging policy and the coming Carbon Crash to be followed by a Solar Dawn. In dollar terms. some $300 billion is being  invested globally in new energy sources while major coal-gas utilities have lost 50% of their value, around half a trillion dollars. In misty northern Europe, Germany and Denmark lead the world in solar power generation. There is a global move towards households taking control of their own power; this will initiate a death spiral of the big power companies.
Under Australian government encouragement five years ago some 5000 homes were fitted with solar panels, there are now 1.2 million homes producing solar power and selling it back to the grid. The irony is that now during hot weather peak usage big generating companies are losing profits to solar powered homes. With Prime Minister Abbott’s scare tactics  on the carbon tax this drove more people to embrace solar power and thereby made matters worse for the coal fired power stations.Within the renewable energy industry the rate of change is rapid and chaotic, people are changing but the old established companies are not. Out of Cambridge University evolved the observation with regard to progress “Nothing should ever happen for the first time”, this certainly applies to to the renewable energy explosion. Gilding asserted the world is no  longer dealing with the future, it is upon us and the future is ugly but if mankind drags its feet the future will be very ugly.
It is Slaughter’s contention the future has darkened and that humans cannot just muddle their way through the global problems. Governments will have to be more proactive  and enforcers. Holmes a  Court described the Hepburn (Victoria)  cooperative wind turbine power station which has made the local community independent of the power grid. Denmark has built 2100  wind farms. Since Abbott testifies “Coal is King” the Australian government is not materially assisting this new growth industry.
The CEO of the Australian Solar Council (Environment ABC RN) states the government is winding back renewable energy:
**the solar roof program abandoned
**the reduction of the renewable energy target
**terminating funding for the Australian Renewable Energy Agency.
It appears Government policy is to reduce the impact of renewables on existing coal fired power stations thereby protecting big coal interests. To this end the California Energy Commissioner has stated “Australia is actually starting to fight the future, this is a mistake as Australia has a wealth of renewable energy resources. Who in our Parliament has recognised this bigger picture?

Towards the Final Hour
Not another medical condition!! At a routine post operation check up with my consulting oncologist he diagnosed an incipient case of gynaecomastia (Greek, gynae-woman, mastos-swelling), a slight swelling of the breast. This condition occurs in one third of older men and is due to a ratio change between testosterone and oestrogen. In my case the origin lies in the legacy of my excised cancerous adrenal gland. No treatment advised.

Fault Lines between Cultures
2015 has opened badly  but unfortunately represents a natural progression from the December blog. An Islamist zealot burst into the Paris office of Charlie Hebdo, a satirical magazine, and killed twelve and injured seven staff. The magazine had published an image of the Prophet Muhammed. Western intelligence agencies confirm the IS is planning more attacks on the West.
Leaders of France, Britain, Germany and other national representatives met in Paris in mid-January to discuss this fault line between Islamic and Christian faith. The French President, Francois Hollande, in a speech declared  that Islam is compatible with democracy but there would be no compromise with French commitment to freedom of speech. The massacre generated very large mass gatherings across Europe in protest. Predictably there were large gatherings in the Moslem world in support of the action to preserve the sanctity of the Prophet. In south-west Sydney several hundred Muslims gathered to support the prophet Muhammed.
There is a growing awareness that a new deal must be generated to improve integration into Western culture for the twenty  million Muslims living in Europe; young Muslims are living badly and unemployment is an immense problem, (Professor John Keane, University of Westminster). Western Governments will have to start tempering ‘terrorist’ rhetoric with firm proposals for a more inclusive society. There has been much comment on ‘radicalisation’ of Muslim youth. This is not a condition that just happens, within Australia  there must be ‘cells’ where inciting and stiffening recruits are carried out. Government policy must be to engage more closely with Muslim authorities, ‘somebody must know something’. As President Bush once infamously said “You are either with us or against us”. Those Muslims who recently demonstrated in western Sydney, where do they fit into this quotation?
A German ex-politician, Jurgen Todenhofer, has returned from a ten day sojourn with IS forces in Iraq. At a CNN interview he indicated 5000 fighters are embedded in Mosul among the three million inhabitants. Coalition air power cannot dislodge them. He states many of the fighters are intelligent, educated and articulate. It was said some fighters returning to Europe are considered losers. Todenhofer is concerned the West is not fully aware of the strength, capability or objectives of IS with respect to the domination of the Islamic world and its intended expansion into Europe. Is this a clever subterfuge by IS, or maybe Western Governments are not aware of the true situation or information is being withheld from citizens of the Western democracies?

Bravery Awards
The Sydney Morning Herald has run the information the Prime Minister  has written to the Governor General recommending bravery awards for those killed in the Martin Place siege  in December. For those who escaped prior to police intervention citations are recommended, besides suffering a traumatic experience and perhaps eventually stress syndrome the escapees were unharmed
To present awards to these escapees belittles the bravery of our military who faced the enemy at Gallipoli, Western Front, Pacific Theatre, North Africa, Vietnam and Afghanistan. By all means present low key ‘certificates of survival’. Considering such presentations sets a dangerous precedent  of recognising other civilians who escape from other traumatic events. It is essential Australians do not dishonour our armed forces who died bravely facing the enemy.

Global Economic Recovery?
The decision by the Swiss Central Bank to remove its cap on its currency against the euro is serious and does not bode well for global economic recovery. The Swiss frank soared 30% against the euro to create enormous repercussions for global markets, currency stability and international trade.  The suddenness of the move has caused losses of millions of dollars in the foreign exchange markets  and  probably bankrupted thousands in Europe holding Swiss loans.
The significance of the move is that the Swiss Central Bank has lost faith in the European Central Bank and its ability to protect the euro, there is a fear the euro zone will descend into deflation. Pressure has been placed on the euro by the financial disaster that is  Greece. The national debt now exceeds the national economy. Greece is slated to default on its debts, which will put pressure on the euro and the possibility is then Greece will return to its debased currency. the drachma.  As the financial power house of Europe there will negative repercussions for Germany if Greece does revert to the drachma.
The Swiss bank is also well aware that despite the marginally improving American  unemployment figures of 6.2% the real unemployment rate is 12.6% as reflected in the US government ‘U6’ report (under employed and unemployed), future trends are not encouraging. The move by the Swiss Bank does not auger well for the economic stability in the foreseeable future,

Rural Bliss
With the confused state of the world swirling above the yellow box tree tops on the farm my feet are firmly on the ground in sweltering heat as I continue to slowly chain saw my way through fallen timber and enthusiastic secondary regrowth. In hot dry weather the ground and timber debris is a lifeless miasma of pulsating  radiant heat. After rain, logs and timber debris are cautiously moved as potentially unfriendly life teems, white ant larvae,  scorpions, millipedes, goannas and snakes are ready to jump, pounce or bite. Great care is taken reducing fallen trees as branches may be trapped crossbow taught; injudicious cutting can result in a head severing whip lash missile. I have conclusively proved that chain sawing is not an advisable activity for older men but against all odds I have survived intact and have not added to my medical scars.

Australia Day 2015
Pearl Beach is a community in harmony, relaxed with itself and family visitors. On this day no politician declaimed the benefits of multiculturalism or Australia’s destiny. It was a morning of sporting activities on the beach for enthusiastic children and adults discarding their inhibitions. The Gosford Brass Band was the backdrop, along with the encircling sandstone cliffs, to an uplifting rendition of Advance  Australia Fair by a passing fair young vocalist. The Australia Day oration described the traditional owners of the Pearl Beach locality, the Guringai tribe and its famous son, Bungaree, This amazing aboriginal  twice circumnavigated Australia, first with Matthew Flinders (1801-03) and again with Parker King (1817), his responsibility during the voyages was to smooth the contact between the explorers and the local aboriginal tribes along the way.
This public holiday, if free of political manipulation, could remain  a deeply significant day for the smaller communities  round Australia. It has become a day to mix, converse and fraternise: to cross our cultural boundaries and indulge in unaccustomed  bonhomie.

 

 

 

 

 

 

 

 

 

DECEMBER 2014

“Reconciling my Gross Habits with Less Income.”      
                                                                                                    Errol Flynn

Historical Fault Lines between Cultures

Climate
“It’s going to be a big one,” so stated a local grazier, but I doubted his ability to sniff the air.  In the first ten days of December, an area of south-eastern Australia was deluged with rain.  The Timor locality muddied under five inches which turned the local stream into a roaring foaming dragon.  In twelve years this was the greatest torrent I have seen.  Weather records in the Sydney region have also been broken – the longest period of thunderstorm activity since observations commenced.  In quick succession we have experienced the warmest winter, the longest summer heat wave and the warmest November on record.  No worries!!
Based on unusual weather events for 2014 a red light alert should now be flashing for Australia. During 2014:

  • there were two category 5 cyclones in the north Queensland region
  • Melbourne experienced four days over 41*C
  • Brisbane experienced super cell storms
  • Blue Mountains  were buried under spring snow storms
  • Australia has burned under the twelve hottest Novembers since 2000
  • over 79% of Queensland is in drought, the highest percentage ever
  • the most worrying event  is the exploding burning methane blowing craters in the Siberian tundra. Permafrost is melting and releasing methane into the atmosphere. Methane is 21 times more potent than carbon dioxide in its global warming  capacity. There is the  possibility of vast fires in the Russian and Canadian  Arctic  due to global warming.

The Lima Climate Change Conference has ended with a watered down communique on a unified funding policy which will be ratified in Paris in 2015.  Progress?  Climate Action Network Europe has released a survey that shows Australia at the bottom of the list of industrialised countries on its global warming policy.

Mid Year Economic Forecast (MYEFO)  
The budget deficit has blown out from $30 billion to $40 billion plus.  Australia’s terms of trade are  the worst since records commenced in 1959.  Government revenues have plunged with the fall in prices for iron ore, coal, gas and wheat.  A comment on the budget update by Deloitte Access Economics (Chris Richardson, ABC RN) intimated Australia has just slipped out of the biggest natural resources boom. Due to the “worst terms of trade for many years the next couple of years may be ugly”.  Big Savings can only come from welfare, education and health.  To compound this situation, the unemployment figures are not encouraging, set to rise to 6.5% amid predictions of falling incomes for Australian citizens.  Errol Flynn’s maxim now takes on a revitalised meaning.
Last month “The Price of Inequality” was cited.  Hitherto , Australians have relied on natural resources for a component of their wealth rather than creating wealth through manufacture or intellectual effort.  2014 will prove to be the year when we no longer rode on the “sheep’s back”.
The MYEFO bad news has coincided with a report by the Gratten Institute (G Gencho) showing a decline in wealth of the 25-44 year olds relative to postwar baby boomers.  Before 1997 house prices and earnings maintained a parity, after 1997 earnings have risen 27% while house prices have risen by 121%.  There is a disturbing trend in home ownership between the 35-44 year olds and the over 65 year olds, between the years 1981 and 2013.

  35-44                                                      Over 65
1981 – 75%                                         1981 – 78%
2013 – 65%                                         2013 – 86%
The Gratten document had identified anger and resignation at this increasing skewed wealth distribution.
Asylum seeker policy is adding to the financial problems.  Chairman, Mr G Inness,  Attitude Australia Foundation (RN am 10/12) provided information on costs of maintaining holding centres on Manus and Nauru.  Running costs are around $1 billion a year while naval and defence support are estimated at $5 billion a year.   Costs for a maximum security prisoner is around $130,000 a year while to maintain an asylum seeker is round $500,000 a year.  This is not sustainable.  Bringing asylum seekers to the mainland would have enabled ABC and CSIRO to avoid budget cuts.  Is the above the will of the Australian electorate?

NDIS National Disability Insurance Scheme
There are alarums off-stage on the increasing costs of the National Disability Insurance Scheme (ABC RN).  Currently the initial program is catering for 9,000 impaired individuals with a staff of 75,000.  Assuming salaries are around $50,000 each per year, the annual administrative/operational cost might be around $37.5 million.  There are 460,000 registered persons with a disability – when the full scheme is rolled out, will it prove to be unsustainable?

Towards the Final Hour
Arrested development in the process of ageing is a good thing.  My condition of peripheral neuropathy has apparently reached stasis, blood tests, and an MRI on my backbone have drawn a blank. Nerve conduction studies have shown on a scale of 1 to 10 i log at 7, that is verging on a severe neuropathy, obviously not a problem since the doctor does not wish to see me until December 2015!  Soon after this diagnosis a splinter was driven in my big toe, the pain was exquisite, I now wonder on the veracity  of the diagnosis.!

In early November, my right eyeball had the lens removed and a plastic one inserted.  I was led to believe the world would be one of colour and vitality; I would indeed be looking on the “bright side of life”.   The moment cometh, bandage was removed and “quelle dommage”, all I saw was a dark grey fog.  There followed six weeks of consulting a retinal specialist.  Eye drops have become a ritual. However, such has been my improvement, the specialist does not wish me to consult him until the final days of January.

Fault Lines between Cultures
A Canadian study (Economist 17/10) has linked extra schooling with a declining attendance at church or mosque.  This study overlaps with the news (ABC RN, AM  16/12) that, in the past few years, the Taliban in Pakistan have destroyed more than 1,000 schools and in the last week, have  killed over 100 pupils in an army school .

The appropriate word for the loss of a family member under the siege situation in Sydney this month does not easily come to mind.  The public reaction is understandable and the media have played their part. It is appropriate to place the Martin Place siege into a time line and to examine  fault lines between cultures.

In the two centuries after the founding of Islam in the mid 600s, an Islamic Empire extended through western, central and southern Europe, northern Africa and central Asia.  The Crusades, terminating in the 12th century, left a bitter legacy between Christian and Moslem.  The Moslems were driven out of Spain in the 15th century and the Spanish monarchy endeavoured to expunge all traces of Islamic culture.  The great age of European maritime discovery and colonisation commencing in medieval times was, in part, driven to break Arab (Moslem) control of the spice trade.

Long after the Crusades, the Islamic Ottoman Empire controlled the Holy Land, the Arab Middle East and south-east  Europe.  The Ottoman Empire ended during the First World War (1918) when European powers controlled much of the Arab (Islamic) Middle East.   For the Arab world, this was a period of stasis until the mid 1960s which coincided with the dissolution of the Western European Empires.  During this stasis, and for years afterwards, there were those who knew of the great days of an Islamic Empire, its architecture, science and culture.

From the 1960s onwards, there has been a rise of Islamic nationalism and recollection of the glories of past caliphates.  As we, in Australia, magnify the memory of ANZACS, so too do Arabs remember Saladin and the battle of Hattin. Arab nationalism has grown with the growth of communications, historical knowledge and education.  In this modern era, there is now a world dominated by Christian/Secular culture and an all consuming capitalism that, for many reasons, Moslems “on the street” are unable to enjoy: Arab youth unemployment is terrible (Doha Round on Youth Unemployment).  The vision by some to establish a caliphate is an attempt, in part, to re-establish the glory days of Islam.

Scattered across the Islamic world are individuals whose dislike of Western culture has boiled over, whether “deranged” or “sane”, these thoughts exist, despite the fact that at “grass roots” level communities may wish to collegially co-exist.  A review of recent atrocities directed at the West in which “Allah is Great” might have been heard are:
1997 –Luxor – 62 tourists shot
2004 – Sinai – tourist hotel bombed
2014 – London – British soldier killed
2014 – Algiers – beheading of French tourist
2014 – New York – axe attack on police
2014 – Iraq – beheadings by IS
2014 – Riyadh – shooting of Danish worker
2014 – Saudi Arabia – stabbing of a Canadian
2014 – Abu Dhabi – stabbing of an American
2014 – Ottawa – shooting of a sentry
2014 – Sydney – two Australians die
2014 – France – pre-Christmas attacks
 (Source – Economist, 13-19 December 2014)
Many of these attacks appear to be “lone wolves” however, it may be these individuals have grown up with a litany of ill will towards the Christian West.  Quite rightly Western leaders have vilified the perpetrators.  However, no-where have I become aware of any concerted effort by political leaders from both sides to establish a commission of enquiry to study a healing process between the Islamic religious state and the Christian nation state.  This is a global problem not a localised regional problem.

Christmas 2014
Despite St. Nicholas (Sinterklaas), a 4th century bishop of Myra, originating the reality of Santa Claus the concept was hijacked by Christian northern Europe and relocated near the village of Rovaniemi, Arctic Circle, Finland from whence Santa Claus conducted his world wide mission. A giant theme park is now being constructed in the Chinese city of Chengdu and it is to be spread abroad the park will be the official home of Father Christmas. For years China has been producing Christmas decorations and gee gaws for Western Christian festivals.  Xinhua, a state run news agency, states that 60% of Christmas trinkets for the Christian West come from the Christmas city of Yiwu. Is the world about to witness a schism similar to that between Constantinople and Rome in the early Middle Ages!?

Christmas 2014, as usual unprepared anticipation, the degustation and the Boxing Day breather, it was a shared day with a cohort of the family, it left a very warm glow. The high point was the children’s carol service at St. John’s, Gordon accompanied by Jill’s almost reluctant grandchildren, enthusiasm sky rocketed with the terminating sausage sizzle. Come the day when the six enlarging families between Jill and I will sit-down to a great family Christmas celebration.
For as long as I can remember the Christmas period  is often marred by a tragic accident. This time there is the loss of a passenger aircraft between Indonesia and Singapore with the loss of more than 160 souls;  in Europe over 300 souls were trapped on a burning passenger ferry in the Adriatic sea while buffeted by a raging storm. It was a perilous helicopter rescue exercise.

The Middle East
Alas 2014 ends on a sombre note. On RN breakfast the Executive Director of the Strategic Policy Institute, Canberra, provided an assessment of the past four months  battles between the Islamic State   forces and the US lead coalition  with ‘boots on the ground’ provided by Kurds and Iraqis. The result is a hard fought stale mate. To date there have been only 1500 air strikes generally limited to IS vehicles. The IS fighters cannot be ‘degraded’  by this technique. The IS fighters have now changed tactics and embed themselves among a reluctant population thereby preventing effective air strikes. Currently there are around 3000 US advisors on the ground but to degrade IS forces at least 10,000 are required, the Iraq government has pleaded to the USA for more troops.
There is a developing reality to the situation in Syria and Iraq. There is a possibility Iraq may fragment into three states, the Kurds in the north, a Sunni caliphate in the centre and a Shia Iraq rump in the south. Such an outcome might precipitate an arms race between Iran and Saudi Arabia with further destabilisation in the Middle East. Such a scenario would undo the international boundaries established by Mister Sykes and Monsieur Picot following the First World War.
There are two further realities, a change in policy is not envisaged by President Obama during his final two years in office, the second reality is that the West may not consider Iraq sufficiently important  to engage in another war to maintain its integrity. The problem is that ideologically driven IS fighters are facing off a reluctantly defensive posture of a war weary West.
This analysis sparked a response from a retired Australian major-general who reiterated that it  will take a ” long time ” to defeat the IS.  It was stated there are 48 countries in the Coalition. With this potential fire power and resources ranged against the IS the public are entitled to reasons why the term “long time” is used.

Vale 2014
The  international and national events during theyear have been cause for concern . In my opinion the worst, scariest and best events  were:
* the response of the West to the ebola pandemic
*methane explosions in the Russian tundra due to global warming
*revitalisation of the Catholic church by Pope Francis.

On a personal basis due to my mid-year major operation I veered ‘towards the final hour’ but with great assistance from my wife I am now striding along a ‘yellow brick road’.

NOVEMBER 2014

No Sense of Proportion!

Not another Medical Condition!

I have a growing concern I am becoming less able to “look on the bright side of life”.   With October consigned to history, I was determined to enter November full of optimistic radiance – this was short lived.

The opening bars of the November symphony on the farm provided a reflection of conditions in rural south-eastern Australia. Two galahs were perched on the edge of a cattle trough desperately trying to reach the water – they failed and flew off! Two large kookaburras were found drowned in another cattle trough. Kangaroos are now drinking at a birdbath close to the house. The continuing drought combines to grip the countryside. Dams have progressed from muddy brown soup to sun-baked clay.

As if on cue, a recent IPPC report has provided a stark warning on the dangers facing Homo sapiens. The ABC news bulletin gave equal time to the IPPC report and an obscure drive-by shooting in south-west Sydney. There was no sense of proportion on the relative seriousness of each news item. This even-handed treatment proves a collective “sleepwalking” to the disaster of the “great disruption”.

The Abbott Government may be unwillingly developing a dangerous mindset among less fortunate Australians. In the book “Global Crisis” by Geoffrey Parker, he dealt with civil unrest among the masses during the period of climate change in the mid-1600s. It was an aggregation of small imposts by ruling elites when their “loyal” subjects were suffering from a poor economy, unemployment, war and poor harvests.

In Australia there may in part be a mirror image and a combination of small financial irritations, namely:

  • Medicare co-payment of $7
  • Fuel tax of $0.01 per litre
  • Salary impositions of only 1.5% for military and civil service
  • Increased tuition fees for students.

The current unstable climatic and economic conditions in Australia, when considered with the dire warnings provided by Professor Steglietz, Columbia University, in his book “The Price of Inequality” (Big Ideas, ABC 4/11/2014) should be a flashing red light for Australia, other Western democracies and particularly America.

Factors applicable to Australia are:

  • since the mind-1990s there has been soaring financial inequality and lower growth
  • there is a lower level of opportunity for offspring whose parents are not wealthy
  • with very few exceptions dependency on natural resources is a curse since wealth does not trickle down
  • citizens of resource rich countries tend to atrophy since wealth does not come from intellectual energy, it comes from the ground
  • resource rich countries have a great wealth disparity
  • there are two ways for countries to increase wealth – this applies to Australia – namely to invent or manufacture something or pursue rent seeking wealth appropriation, the latter is pernicious and currently Australia is caught in this trap.

Steglietz contends advanced economies penalise the poor:

  • banks are always the first claimants
  • citizens lose homes and farms
  • billions are paid to keep banks afloat but there is nothing for small investors
  • rent seeking causes inequality and weakens the economy.

My progression “Towards the Final Hour” has been given a boost by the unexpected diagnosis of another medical condition – peripheral neuropathy. First indication was a night time tingling of the toes. Events moved to a North Shore specialist’s rooms where I failed the pinprick test in my extremities and was subjected to shock treatment and an MRI on my spinal column. Blood tests followed including those for mercury and lead. I now await the cause and the cure. Such has been my medical condition this year, I have been forced to admit I now have more social intercourse with the medical profession than I have with friends and family.

The China-American Climate Change Agreement was signed on 7thNovember, a few days before the G20 Summit in Brisbane. The Agreement calls for China to cap emissions by 2030, while America will reduce emissions by 26-28% below the 2005 levels by 2025. Details have not been released by either party.

There has been vocal criticism in the United States that it is a poor deal for America but, industrially and economically, China has a long way to catch up, its major problems being:

  • its high energy intensity industry
  • a slow growth in consumer and service industries
  • poverty
  • a requirement for greater GDP growth.

At the G20, Australia was embarrassed and wrong-footed by the Chinese-American Agreement. Australia’s “direct action” policy provides for financial inducements for polluters to reduce emissions. Business will compete to win tenders and be paid to undertake emission-reduction targets. The rest of the Industrialised World is using a carbon trading scheme. Australia has set up an Emission Reduction Fund of $2.55 billion over four years – the target is to reduce emissions by 5% below the 2000 emissions by 2020.

The Chairman of the UK Council on Climate Change, Lord Deben, is scathing on Australia’s climate change policy. The planned expenditure (2.55bn) and the target reduction (5%) is derisory. Direct Action will not work and Australia is out of step with the rest of the world.

Like an errant willy-willy, the G20 Meeting stirred up Brisbane and was gone. The G20 Leaders’ Communique dated 16th November 2014, appears to be a document of agreed principles that mandates Ministers must now implement policy. Principal objectives appeared to involve living standards, jobs, global growth, Third World infrastructure and the transfer of technology; there is a move to relocate global institutions away from the West. There is a move to expand global gas supplies. In relation to climate change, the G20 seeks sustainable development.

The overall objective of the G20 is to create sustainable economics through co-operation, transfer of resources and seek closer harmonious union. Philosophically, there may be a problem highlighted by the critical situation in the European Union – the policy of closer co-operation and less competition has moved Europe towards a condition of stagnation and deflation. Competition is one of the main drivers of prosperity and innovation. The G20 policies should consider Europe’s situation in relation to global growth.

The collegial spirit of the G20 has already fractured. Despite the recent steep fall in the oil price Saudi Arabia has refused to reduce production, an ABC News item alluded to the fact that a low oil price will damage gas production in the United States, thereby forcing the States to rely on Saudi oil.

A curious reverse migration is seeing increasing numbers of Jews returning to Germany. Israeli citizens are applying for European passports, many with the objective of settling in Germany. Reasons cited are the cost of living and the hostilities with the Palestinians. The Israeli government has condemned these ‘descenders’ for lack of nationalism and an insult to Holocaust survivors. The philosophical issue is unless brain washed how long will younger generations follow national ethos supported by parents and grandparents? This mind set has relevance to Australia due to the fading numbers calling Britain ‘home’ and the ANZAC tradition. In the years to come the Australian government will have to maintain a robust memorial policy.

I attended the local Light Horse contingent Christmas Party. I found it sobering to look around the gathering and realise it was these type of people who produced the deeds, myth and legend that is ANZAC

The closing bars of the November symphony mirrored the opening cadence, the rainfall for the month was the lowest in twelve years. Kangaroos are regular visitors round the birdbath.