Perhaps even if you still don’t agree with our arguments about minimum wages and pay equalisation, maybe you can agree that artificial interference in the market by governments only tends to create another problem while claiming to solve one problem.
We’ll bang on about it for one last time today. If you’ve had enough already then I suggest you give today’s Money Morning a miss. Join Shae again tomorrow for Money Weekend, or we’ll see you again on Monday where we’ll bang on about something else.
To our way of thinking, there’s no difference between pay equalisation and minimum wage legislation. Both create artificial wage markets which aren’t sustainable over time.
So today we’ll take another bash at the ultimate job killer, the minimum wage. The argument always put forward is that without a minimum wage, wages would be pushed to zero and workers would work in slave-like conditions.
This argument is false and is made without any evidence. Because there is no evidence.
Providing you have a free society where people are not compelled to work against their will then it’s not possible for wages to fall to zero.
Contrary to conventional wisdom, it’s actually only in economies where there is an interfering and coercive government (by nature all governments are coercive of course) that real wages are forced lower and slave-like conditions exist.
And unlike the claims made by the zero-wagists, there is plenty of evidence to support our argument. Just look at any tin-pot dictatorship, or even at any western democracy for that fact.
Government’s favourite way of doing this is through inflation. We won’t get sidetracked, but take this revelation from the Herald Sun:
“Australians have to work almost three times harder to pay off the average family home than they did 50 years ago… homebuyers on the average income now have to work for 19,374 hours to buy the average Australian house with the average mortgage… In 1960, it took homebuyers just 7500 hours to pay off the average mortgage.”
Take into account other increases in the cost of living and the devaluation of your money, it’s no wonder the quality of life hasn’t improved.
Anyway, it’s important to remember that wages is just another term for the price of labour. You sell your labour to an employer for a price (wage) that you’re willing to accept. And the employer will pay for your labour (a wage) at a price which he or she believes is acceptable and profitable.
As we’ve mentioned before, the impost of a minimum wage distorts this pricing action and leads to employers finding alternative ways of employing people.
Either they will look for new technology that can replace the work of individuals, or they will send work offshore where the price of labour may be cheaper. Or they may even use legal or illegal imported labour where different working conditions may apply.
The point to remember on the use of cheaper imported or exported labour is that the claim about cheap labour from overseas ’stealing’ the jobs of Australians isn’t true. In reality it’s market manipulation by governments, bureaucrats and trade unions which is responsible for unemployment.
In most cases jobs aren’t actually being taken from Australians at all. Because either the job in Australia doesn’t exist at the price the employer is willing to pay and the employee is able to accept, or it’s no longer profitable for the work to be done here due – in part – to minimum wages and other labour restrictions. Therefore the job would disappear anyway.
If it wasn’t profitable for the employer to offer the job at the minimum wage level, and the job couldn’t be sourced from overseas labour then the employer wouldn’t create the job anywhere – it wouldn’t exist.
Even in the case where an employee loses a job in Australia, and a new job is created overseas to carry out the same tasks, the job isn’t being ’stolen’, but rather it’s due to the inability of the employer to source the job locally at a profitable price of labour.
If it wasn’t profitable for the company to keep employing an Australian at the higher rate, and they couldn’t source the work cheaper overseas then eventually the Australian would lose their job anyway.
Businesses go bust all the time for that very reason.
Let me illustrate it to show you what I mean…
Let’s say a job is only profitable for an employer if he or she can pay someone $8 an hour. However, the minimum wage law insists that the minimum pay is $10 an hour.
Therefore the employer will not create a job to pay someone $10 an hour when he or she knows they will make a loss. In this case no job can be created and therefore there is no job for an Australian at a rate of $10 an hour.
But then let’s assume that the employer finds a job market overseas that will allow him or her to pay workers $7.50 an hour. And assume it costs 50 cents an hour for the completed work to be imported back to Australia, the employer is able to make a profit on the production of the product.
Therefore, due to the lower rate of pay in the overseas employment market, a job has been created at a total cost of $8 an hour.
But remember, this isn’t a job that has been ’stolen’ from an Australian worker, because at $8 an hour the job doesn’t exist in Australia.
And as we note, even if it’s an existing industry, if the minimum wage rate was unprofitable for the employer, the job would have disappeared in Australia anyway even if it wasn’t replaced by an overseas worker.
In other words, it’s the artificial setting of wage rates that causes job losses not overseas workers who are prepared to accept a lower wage.
But let’s put it another way. Let’s forget about minimum wage levels. Let’s look at higher pay scales where you’ll see that the same principle applies…
If we consider there’s someone applying for a job as a hat salesperson that pays $100,000 a year. But this person has no qualifications or experience as a hat salesperson. However, the employer takes a shine to them.
The employer likes the fact that the applicant has previous sales experience and believes that the ins and outs of the millinery trade can be easily taught.
However, the $100,000 wage was aimed at someone with hat sales experience, so the employer offers to pay the unqualified applicant a wage of $80,000.
What does the applicant do? They would prefer a wage of $100,000, but in the opinion of the employer the applicant is not worth that amount. The applicant is only worth around $80,000.
The applicant has two choices, he or she can either decline the job offer and hold out for a higher paying job elsewhere, or they can accept the lower pay. In this instance the applicant accepts the lower pay and a job is created.
But now consider what would happen if the government imposed a minimum wage level of $100,000 for all hat salespeople. Naturally, those in the industry would be delighted, “It’s a bumper pay day” they would yell.
As we pointed out yesterday, it would be a bumper pay day for some, but not for all. In the instance of our applicant above, it would not be a bumper pay day. Because as much as the employer may like the applicant, he or she would only employ them if they could pay the applicant $80,000.
But under the law they could not. And worse still, even if the applicant is prepared to accept a lower wage the law decrees they cannot accept it.
In this instance no job is created.
Now, I’m sure you’d agree that an artificial minimum wage for a middle class job would be terrible for many in the middle class. It would make their job prospects much tougher and would either force then into trying to apply for higher paid jobs for which they may not be qualified, or it could force them to take work in a lower paid job which they did not really want or were not suited for.
Or it may mean they are left without a job.
If you accept the logic that an artificial minimum wage would be terrible for the middle classes, then logically you have to accept that current minimum wage laws are equally bad for those on low pay.
If we return to our point above about wages being another term for the price of labour, then you’ll see that wages would not go to zero if there wasn’t a minimum wage. To claim it would happen is brazen misinformation.
In fact, if you accept the arguments above, then a minimum wage may not have any impact on the wage rates of existing jobs at all. In the case where jobs are not currently in existence due to minimum wage laws, new jobs would be created onshore rather than overseas, and it would be up to employees to decide whether they accept the wages offered.
If the wages offered are too low then employers will not attract a workforce. Especially if there are competitors in the new industry as competing firms would increase wages to a level that would attract workers.
Naturally, if workers are still not prepared to work at a level which the employer deems to be profitable then there will be no job creation. The point is that the market and individuals will have decided that, not an arbitrary decision from a jumped-up bureaucrat.
However, in some instances the abolition of the minimum wage could lead to lower wages. Yet, it should be remembered that those higher wages were only available to those lucky enough to benefit from an artificially set wage – this is how trade unions work.
For instance, if an employer has a total wage budget of $500,000 per year and the minimum wage is $100,000 each, then he or she can only employ five people.
Yet, if there is no minimum wage the employer can either maintain the current staff on their wages, or if he or she believes there would be an increase in productivity and profits with six employees then there would be an incentive for the employer to drop salaries to $83,333 each.
Or offer varying salaries above or below the old minimum wage based on performance.
In that case the employees would need to decide whether they are willing to accept this or not. And if not, find alternative employment.
The point is, the example above is merely the opposite to what happens when you have trade unions and governments manipulating wages policies.
Increases in wages that are determined by governments will necessarily lead to losses in jobs. There’s no avoiding it. It applies whether you’re looking at manipulating the high end of the job market, the middle, or the low end.
The reverse is that the abolition of artificial wage levels such as the minimum wage creates jobs. That’s real jobs, not the type of job the government creates by paying people to install insulation and then paying a bunch of other people to rip it out again!
Cheers.
Kris.
{ 129 comments… read them below or add one }
Quote “To our way of thinking, there’s no difference between pay equalisation and minimum wage legislation. Both create artificial wage markets which aren’t sustainable over time.”
Interesting but I remain very unconvinced.
Some good examples of problems with wages are Zimbabwe where annual inflation (official) is 4530% (link here http://www.newzimbabwe.com/pages/protest65.16557.html)
and in Pakistan where the minimum wage was about $77USD per month just a year ago.
(link here – http://irregulartimes.com/index.php/archives/2009/03/26/minimum-wage-gets-you-in-lahore-pakista/)
and in Kurdistan where they have 50% unemployment unskilled workers get $3.50USD per day (I’m not sure how much you can shave off that wage) link here – http://ekurd.net/mismas/articles/misc2010/2/independentstate3534.htm
None of these actually undermine the Sayce contention by the way, but they do put our situation in perspective.
If you think housing is an emotional subject, wait for the response you get when you tell someone they will have to take a substantial wage cut.
Kris,
I think in an acedemic world, you are right – when there is nothing other than an artificial free market at work, wages set without any interference would never be at zero.
The problem is that in the “real world” we tend to always have some kind of interference – be it whatever you call it… government, “being fair”, or just plainly the wish of common people.
Eg. if we removed minimum wages, I’d bet that it wouldn’t take long for the Kris Sayces of the world to complain that “workplace rights” are interferring with the market price – that they artificially disrupt the free market from allowing employers to select employees that better fit within the employers way of treating employees. If only employers could hire and fire on a whim, that would ensure the market operates with the full freedom it deserves.
As such, we’d go backwards really fast, and those with power who can set standards (be it price or conditions) will dictate the outcome for others who can’t. Historically, I can easily find evidence that tells me the past wasn’t a better place with those poor conditions.
Taken to the extreme, everything impacts the market. Nothing can be excused from interferring as everything is relative… I can easily argue that your blog posts unnaturally impact the property investment market, and that we should (as a community) prohibit you from further negative posts about such things… after all, it should be a free market without interference? yes?
sayceo wants minimum wages reduced /abolished ,so he can pay his workers 2 cents less per hour,
than what was the minimum wage
>>>>>>>>>>> admit it sayceo,, ur an IDIOT
GKS – there is no such thing as “work place rights” First you need to define what a “right” is or at least set some sort of criteria to qualify whether something is a “right” or not, otherwise people can just as easily say I have a right to a dog, a BMW a harbour side house and on and on and on. Sure some people will tell you they are “positive rights” to try and put…well… a positive spin on it…usually marxist academics, but thats just being intellectually dishonest. “Positive rights” is just another euphemism for “wealth distribution” You see, using your example of workplace rights, if you have such a right then you necessarily have to “force” someone to provide it for you. In other words your so called “right” entails an obligation from another individual, hence the redistribution of wealth.
Etch – If someone wants to work 2 cents an hour and agrees to do it voluntarily then so be it. I don’t see anything wrong with that.
I could never understand how people can claim to be logical yet support minimum wage laws. You have have to wonder and to paraphrase Rothbard, if minimum wage laws are of such benefit to unemployment why stop at $10 and hour, why not $20, $50, heck why not $1000 and hour…precisely because they are not, in fact when you “get” the logic you soon realise minimum wage laws are really unemployment laws, the higher the minimum wage the higher the unemployment.
Next time when you hear a politician talk about “higher minimum wages” think “higher unemployment”.
Full points for your passion on this matter Kris but this subject is dead in the water. There are no employers out there creating jobs, the jobs you speak of went offshore from the beginning. A real job hasn’t been created in this country for decades because we’ve forgotten how to manufacture real goods that others want to buy and had little interest even when we could.
It should be clear to every Australian that that is all in the past and we will never see that again. It’s too late. Our only export these days is people. There’s a opportunity we’re told to export our financial services professionals to the world. Sure we’ll send over our pups to teach those old dogs on Wall Street a thing or two about their guzzinters.
In any case we’re all in the same business these days and that’s to get into as much debt as we can to buy as many worthless things as we can and then double down on that debt as inflation and credit willingness allows.
So as for the minimum wage who gives a toss?
ID -read my post slowly & thouroughly …2 cents LESS than the his wishful abolished minimum wage ..
for eg. if sayceo pays currently $25 an hour ..he now wants to pay $24.98,,BUT THAT WONT HAPPEN ,HE’LL DROP IT TO $15 OVERNIGHT
because on previous related topics he states its illegal to pay one cent less than the current min. wage
i am being generous with 2 cents
i have personally worked on less than minimum wages & i tell you there are no friends (bosses) out there who appreciate that so i up and leave not too soon
at least with award (or above)wages i know what i am getting legally & not at the whim of a frugal ar$ehole
and to people in an illusion that doing away with a minmum wage causes unemployment & WILL get more money from there lovely employer is seriously kidding themselves
doing away with minmum wages will only reduce wages(quickly) NOT INCREASE
unless ur the bosses cousin , nephew,lapdog etc wages will go down not up
More for your edification 1D then Kris’.
Yours and Kris’ assumption is that employers would treat their workers fairly by making a proper assessment of that employee’s skills and thus paying him a “fair market rate” and that people are, when you get down to it, are good.
Simply it ain’t true.
There is plenty of research to show that people do not obey laws because they are “good” or it is right to do so. It is the fear of being caught. For instance look at the behaviour on the roads. Drivers have made a correct assessment, the chance of a cop catching them are remote given the reliance on machines to do the enforcement. Getting a speeding ticket sent to you simply does not have the same enforcement value as a cop pulling you over. Thus driver behaviour has detoriated.
As GKS properly states the examples that show that the free market weren’t fair to workers in history are in the multituide. Negro slaves (in fact slaves of all ages, Romans, Egypt), serfs, coal miners, use of children as labour in coal mines and cotton mills, are just a very few. England’s harsh treatment of people guilty of minor offences comitted in order to survive, debtors prision and conscription of the poor into armys shows that governments too were uncaring of its citizens.
This is not to say that the market was totally free then but there were certainly less labour laws then now.
A fair argument is to say well we are much more educated now. We understand so much more and we treat people better now. Again there are many present day examples that it is not so.
Many workers do not have the benefit of minimum wages and employers have shown their willingness to exploit this. Taxi drivers, fruit pickers. With fruit picking especially it has been shown that Australian workers are not willing to work contract rates. So what did farmers do, pay the market rate? No sir, lobbied the government to allow foreign workers to do the work.
We have seen the use of child labour in India working on of all things Comonwealth Games sites. Large corporations willingness to exploit overseas labour who do not have the benefit of social welfare thus have to take any job going or starve is legendary and many. So of course they will work for anything anyone offers them. That is not “free choice” which Kris so passionately advocates.
Manyt insulation installers used young or foreign labour. Literally I can go on but I have taken enough space but I will say one more thing.
Not once has Kris proven that I am wrong. All he has ever been able to do is give an example where three teenagers could not work for a hardware. That’s it. He tried today but of course used the extreme example that people such as myself that wages would be driven to zero.
That’s never been said here but what has been consistently said is that employers would take advantage and drive down wages. And what would that do? Drive people back to trade unions, not a result that capital wants. Minimum wages exist to protect those that do not have real choices and they are as necessary now as when they were first brought in.
Kris in his heart knows the truth and the above is it. These are the facts and they are undisputed.
Also I might say that people’s capacity to assess skills and thus their market worth is poor. When we can pay someone to hit a ball around and entertain us for a few hours can earn millions and someone who can invent a drug that saves thousands of lives is poor what does that say about are assessment skills. By the way I have not even gotten to the fact that executives pay them way too much for their “skills”
etch – or maybe 2 cents an hour? fishing for the bottom, but cannot find anything naturally solid down there ….. ..
Well said, Kevin B. Alas, the evidence is that Sayce is somehow uninterested in finding out the truth of a given matter, if that should conflict with his paramount value and need to be a “contrarian” to mainstream thinking on any given subject.
I have harped on this for longer than I care to remember, but it is important to keep this fresh in mind, or risk being mislead by yet another false prophet. As if we did not have enough of them in the MSM ,,,
PF – You may recall that at one point we had a discussion about the value of a commodity based currency, such as gold, for providing stability and predictability for business. In that context we especially discussed historical inflation/price levels, etc.
I have been watching this Crash Course in economics suggested by Drew, and find it most informative. It is a series of short videos and you can watch any of them by clicking the Chapter numbers above. Chapter 16 is on Fuzzy Numbers, and it has a tremendous chart towards the beginning, going back to 1665 to 2005. It is one of those pictures that tells you more than a thousand words about the virtues of having a commodity based currency.
The key concepts, perhaps, would have to come down to this: monetary discipline, and the price stability and predictability for mental calculations of value in an economy for individuals and businesses.
http://www.chrismartenson.com/crashcourse/chapter-16-fuzzy-numbers
Ah, the biting irony of the number torturer’s handiwork for all to see. If nothing else, check out just one minute about the way hedonic adjustments are being made to computers when calculating the CPI and the GDP figures. You will find it at the 10 minute mark in the above referenced chapter.
After finishing with that Chapter, I am convinced more than ever before of the virtues of making value calculations by reference to something more solid than the doctored figures we are fed from crooked governments and their minion statisticians. Alas, if GATA is right about the surpression of the gold price over the past few decades through surreptitious gold sales by central banks which they have been disguising as gold leases, then even value calculations in terms of the gold price will be less than reliable. It is almost anybody’s guess where the gold price would be without the incessant naked short selling in the futures market.
Guys, here is the typical example of how “no one will listen” to the warnings due to corruption and the hidden agendas, all through to the highest levels.
Puntpal, stay the course mate. Don’t get frustrated as it is counterproductive.
Don’t shoot the messengers, they have their view point as you do. God knows how many times I’ve been mocked for my opinion and time has proved me right, not because I’m a genius but because I listen to all views and apply logic. I give my views and if someone benefits from it then I am satisfied.
A little story for you, two days ago a supplier of mine who is quite arrogant, (you will understand why as I tell the story) said to me that “you won’t be feeling too proud of your heritage now that the Greeks are in disgrace. They may have been the birth of modern culture but they are now the ones who bring it down. Greece is only a pinprick in today’s world”. Followed with laughter.
My reply to him was that “the Greeks are no more restricted to the borders of the country of Greece than the Jews are restricted to the state of Israel. The Spartans of today may not have “six packs” but they still have the passion for justice. “ “the Greeks gave the world science, maths, architecture, democracy and freedom which has lasted to this day. Who gave us usury to enslave it?”
The guy left my office without saying “goodbye”.
Have a look at this link, 4 mins approx, it’s a recent interview with Harry Markopoulos who took 5 minutes to work out Madoff was a fraud, and 8.5 years to convince the authorities. Then apply it to what we are hearing about the Australian situation.
http://www.youtube.com/watch?v=_ORvZjBKo-I&feature=player_embedded
Listed to cb about gold. By this time next year you will have had a “religious” experience.
That is a veritable little story, Nick. Ah, about Madoff, there is still too much whitewash around as to why he was not properly investigated earlier. Here is a version, which I have come to believe to be pretty much on the money, but in today’s environment nobody dares speak its name. You gotta read between my lines, though, so here it goes:
Madoff was protected by the SEC in the same way that Goldman Sachs, JP Morgan Chase, and the other white shoe boys on Wall Street have been and continue to be protected. The only reason why Madoff was finally exposed and sent to gaol was that he broke the unspoken rule of his tribe, and namely that, while all comers of outsiders are fair game, you cannot steal from the members of the tribe. Madoff broke that rule, but while his own tribe remained blind to what he was doing, he remained part of the herd of sacred cows on Wall Street and nobody could touch him.
But the tribe misjudged their man. They knew of course that he was a cheat and a liar, but could not believe that they were as much his victims as anybody else. In this respect, Madoff was a democrat and a true egalitarian. He was also courageous: He dared to rob the robber barrons themselves. What a hero!!!
However, the game was up when he could no longer meet redemptions to the members of the tribe, his own people. Inevitably, the tribe then turned on him and cast him out, and he went straight to gaol, where he remains. This, I would suggest, is the script closest to the truth, the real story of how Madoff made off with the white shoe boys’s money, the real script the name of which still no-one dares speak its name.
“”"”"By this time next year you will have had a “religious” experience”"”"
as in golds gonna tank???????????
etch – hard to say. Gold is what gold is. It is humble and makes no grand claims on anything, but in spite of its modesty and recent low profile, it has endured for millenia as money, while thousands of pretenders have come and gone, swept off the stage of history along with their fraudulent instigators and backers.
In that context, it should not be too difficult to appreciate the old economic saw, that the golden rule in economics is that he who has the gold, rules. Gold after all, is said to be the metal of kings.
Interpreted another way, a more direct argument to answer your question in the affirmative might go like this:
1. Gold is money.
2. Money talks.
Ergo
3. Gold talks.
QED
I won’t buy into the minimum wage debate as stated before but and would applaud the gallant defence of the worker if I could be sure that all workers ALL provided their employer with an honest days work. In a perfect world there would be no need for a government to stipulate a minimum wage however this drama called life is performed by people.
cb @ 11 been watching martenson tapes too! Fantastic and many thanks to drew. I’ve always despised statistical data and have never quoted any here because they are even cheaper than pub talk. To all those out there that dream up all this crap they can belt it up their clacker. And lastly what was it he said you should do when someone tells you that this time it’s different?
Nick @ 14 Cheers brother. Perhaps it’s time you exercised your free market prerogative and shopped elsewhere. Damn the fools!
cb – He said you should HIDE YOUR WALLET!
etch… suppression of gold is like the suppression of the truth. When the lie, that is fiat currency and it’s mechanism, is revealed watch the spectacle. Certainly there could be further attempts at suppression by the manipulators, however, once the “scam” that is currency is revealed, it will make Madoff look like a boy scout.
Beware what you wish for cb because 2000 years ago the romans figured out how to fractionalize gold and ruined their empire in the process. Like vaporous funny money it blends well with other base metals and before you know it some bastards thumb would be pressing down on the scales……….just people that’s all. PF would call me bitter and twisted well he can add jaded to that too. I was once asked if I was a bull or a bear, well naturally I’m both. I just wanna be the right critter at the right time.
All currencies are based on a system of trust but for some time now they have been based on fear. Fear that the truth will hurt and it will. Right up to the last moment no one will want to hear.
How about this for a conspiracy theory. A total fruitcake might pose the theory that the US Govt sacrificed the WTC to give it a seemingly valid excuse to invade Afganistan so that it could control and manipulate herion production to the worlds largest narcotics customer and then further invade Iraq in the belief that global peak oil had been arrived at and conveniently dug their heels in where the majority of the worlds quality oil reserves are and distracted the nation and the rest of the world from the criminal activities perpetrated by Enron.
and..and…..and……..and…………and……….and..
“”"”"”and..and…..and……..and…………and……….and.. “”"”"”"”"”"”
the beat goes on………………………..
“”"”"Right up to the last moment no one will want to hear. “”"”"”"
cos the “system” for the everyday joe blow is so delicate that cant handle the truth
re; my post @ 21 clearly vaporous funny money doesn’t blend with base metals at all but it does blend with liberal amounts of bullsheet.
Oh yes…. give me your dumb and your numb and I shall cloth them and house them and chew them up and spit them out.
cb..#15…we’re on the same frequency.
Fitch..#18….”I won’t buy into the minimum wage debate as stated before but and would applaud the gallant defence of the worker if I could be sure that all workers ALL provided their employer with an honest days work. In a perfect world there would be no need for a government to stipulate a minimum wage however this drama called life is performed by people.”
….very true, it works both ways.
“Perhaps it’s time you exercised your free market prerogative and shopped elsewhere. Damn the fools!”…..I’m a fair guy but the trouble is that this makes some people confuse my “meekness” as a “weakness”. He needs my business, I don’t need his. I believe he’s realised that now.
Nick i wasted my time typing as I should have assumed your answer. Give me a few good men……
Fitch…believe me when I say that there are many good men out there. Powerful, influential and “chipping away”. It’s just that they don’t wear it on their sleeve.
Nick I hope your right. How many revolutions have removed their corrupt leaders and upper level civil serpents, jailed them, and righteously vilified them only to discover that they must release them and re-enlist them as the mechanism is too intricate and the level of lies, deceit and oligarchical complicity so confusing that only they know which buttons to push.
Go Fitch !!! Don’t hold back now. Lol.
Why settle on a Quinella when you can hit the Trifecta?
Nick, the guy is a loud mouth and, as Fitch says, a damn fool. When you are in a position of strength, you can only feel sorry for him. Even so, unless he showed signs of improvment and gave an indication of having become a consumer of humble pie, I would at least drop a hint or two to him that I was looking to rationalise my list of suppliers, and let him stew.
We should have had our global financial revolution by now conditions and timing were right for hostilities and blood should have spilled but instead of natural justice every man woman and child is intravenously tapped into the Matrix masters eg. Goldman Sachs and co. who flaunt publicly flaunt their hatred of all things human and humane. Spin doctors of death and poverty, promoters of slavery and servitude.
@ 32
& wat can we the hapless sheeple do about it? seriously
& how they publicly flaunt it ..i never seen it
And all that demonic behavior comes with a handsome annual salary and bonuses.
Etch…their cheesy feet have left their stinking footprints from capital cities to backwater towns the world over. Greece’s misery lies squarely at their crusty toes. They sold the Greeks a product they knew was faulty got them to pay for it with everything they had and tapped into future earnings to boot. Now they’re placing bets that the bride of Frankenstein couldn’t turn a trick down Fitzroy street. Of course she can’t she’s missing the vital bits.
Who was it 3 months into tarp that wanted a mechanism to be able to pay back the loans and why are those very same spooks running back to congress asking for more? Just to mention a few.
aaahhh wat “product” was that?
& is that “product” happening here in oz?
Firstly the lent them money which they created out of thin air (Ponzi), in exchange the Greeks issued bonds which were exchanged with GS. These bonds or their future yield was packaged with mortgaged backed securities and credit default swaps and sold off to any sucker willing to take them. These where hedge funds etc. Effectively the Greeks owe them the interest on the loan which they can’t pay because remember GS has hooked into their future revenue i.e. tax collections and the like effectively draining them of the ability to repay and if and when they default on payment GS are insured by the credit default swaps which they are now actively selling off and buying up more insurance betting that Greece will default. Beautiful and it didn’t cost them a zack.
If you bought a car with a broken engine on the cheap and then insured it with the express intention of torching it to collect the insurance you’d wind up in jail. No difference.
GS lent the doe to the Greeks knowing full well that the terms couldn’t be met and then effectively bet on Greece’s failure by insuring against it.
It is of course much more complicated than this but I think I’ve got the gist.
Who do you think be the suckers sitting on a lot of those derivatives?
The oz banks. 13.5T of them.
yes diabolical,i see…
oz has 13.5T..
how much trill owing did greece have till it blew up?
also whats thye point of doing that much short term damage & almost killing the goose so to speak?
then wat happens ? total control?
Hmmmm – I see you huys are on the hooch again.
etch – Didn’t Blankfein say that they were doing God’s work???
Fitch – you said:
“Who do you think be the suckers sitting on a lot of those derivatives?
The oz banks. 13.5T of them.”
Seriously, I have been wondering aloud about the Oz banks’s off balance sheet assets. Just what the luck are these supposed to be? Nobody seems to know, and if they are composed of junk like that, then the bomb has been planted and we could be blown up whenever it pleases the robber barrons. Also, GS has been quite active here in Oz, and they have a big hand in having us pay for the NBN. That will be one mf of a financial bomb all by itself, but the bombs they may have already planted could indeed be the sorts of derivatives you mention.
PF – I know it must seem like that, but stranger things have happened, and what we are talking about is quite in character for the insatiable vampire squids on Wall Street.
PF-& u ? the plonk? lol
Sayce’s logic is sound on this matter. Those who mistakenly believe that government intereference – eg minimum wages – is a good thing for an economy obviously have never “created” any jobs themselves via having a business. If you own a business that potentially creates jobs then you would soon realise that Sayce is absolutely correct that minimum wages destroy jobs.
If you believe in this kind of government interference then we may as well go a half step further and let the government run ALL business – hello MARXISM/COMMUNISM!
Were any of you ever awake during the 20 th century????
cb @ 40
Blankfein then, he slowly begins to argue the case for modern banking. “We’re very important,” he says, abandoning self-flagellation. “We help companies to grow by helping them to raise capital. Companies that grow create wealth. This, in turn, allows people to have jobs that create more growth and more wealth. It’s a virtuous cycle.” To drive home his point, he makes a remarkably bold claim. “We have a social purpose.”
Social purpose? Those who have lost their jobs or seen their pay slashed thanks to bankers who flogged dodgy mortgages and dreamt up investments so complex not even they understood them, would gladly tell him where to stick his social purpose. But the problem is, Blankfein is a good advertisement for wealth creation
yeah no worries sandra, work is charity ,not look after ur self
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article6907681.ece
Sandra – having a job is not everything. I would have 5 positions to fill rightaway, if I should be so lucky to pay $5 per hour. And I could probably fill all of those positions in short order if the government stopped interfering in the labour market and abolished the minimum wage and the dole along with it. Hell, I might even be able to employ more people at $4, or even $3 an hour. Where is the limit? Where to draw the line? Or is there no line to be drawn here? What do you think?
cb-italy’s next if you look @ link/chart
http://blog.foreignpolicy.com/posts/2010/02/10/how_bad_is_greeces_debt
etch – yes, all that sounds good in theory. In reality, the robber barrons have been ruining perfectly viable companies, and now have moved onto ruining entire economies and countries by setting them up for failure, and then short selling them until they are face down in the mud. Plus, they have their political buddies in their pockets who will assist them in all sorts of ungodly ways. That is the reality. But, hey, money talks, so the looting is unlikely to stop anytime soon, no matter how much people whinge. Those doing God’s work are clearly not interested in such, minor distractions.
etch – Yes, they will certainly have their turn, all in good time. After all, Italy is loaded with gold, so they will go after that without the shadow of a doubt. As for Greece, they are clearly after their islands. The disgraceful and criminally monstrous excesses of these people doing God’s work simply leaves me speechless. They might indeed be doing their God’s work, but you gotta see who benefits. The obvious answer to that, the all too obvious, you might say, is God’s own chosen people. It all fits, you see, in their own minds, at any rate.
“It appears that Goldman Sachs have colluded with past Greek governments to reduce the appearance of Greece’s debt for short-term gain, while in reality making it worse than ever,” said Arlene McCarthy, vice-president of the European parliament’s economic and monetary affairs committee. “These deals have increased costs for Greek taxpayers and left a mess behind for Greece’s citizens and the eurozone.”
Anyhow, in terms of the robber barrons’s own internal logic they are indeed doing God’s work. The only thing is that the script running internally within their own heads is a little different from what you and I are being told through the MSM. We are being told at all times what they are doing, and often what they are planning to do, but God’s chosen people speak in code, and unless you have some inkling of the code, you will think that they are saying one thing, and they want you to think that, of course, while they mean quite another that only, or mostly, understood only by the initiated.
Here we go, again, PF. Some more cooky interpretations of events for you to play sport with.
On wages, everyone will see it from their own perspective, so I will put a little example forward for thought.
My father wanted me to lean the “value” of work. He loved his fishing (hey, he’s a Greek) and he had a local ship chandler that he went to regularly for fishing supplies etc. When I was 9 years old my father asked the owner of the store if he would let me work in the shop Saturday mornings and school holidays for no pay, as the opportunity to gain the experience was more valuable. The man agreed and I worked in that store until I was 14 years old. I worked for no pay on Saturdays until the school holidays came and the owner, of his own free will, paid me $1 (one dollar). Don’t laugh as that dollar was a fortune to a 9yo. It was just enough to buy a necklace (cheap, but I didn’t know any better) for mum and a tie for dad. The owner increased the pay, without my asking, as he saw my value. I cried at his funeral years later and still keep regular contact with his family. So the first dollar I ever earned I spent on my parents as a thanks. This subconsciously gave me the foundations for the rest of my life. Two things I promised my parents that year. 1) That I will buy them a luxury car one day and 2) I promised my father I will buy him a powerful speed boat so he can go off-shore to get the “big one’s”. You see, we used to fish off the breakwater and watch all those lucky buggers powering out to sea. I watch my dad say “ahh that’s where I’d like to be” and that is when I made him the promise.
When I graduated from Uni and landed a high powered international job, I had any company car of my choice. The Christmas of that year I presented my parents with a brand new luxury car, and the year later, that “dream boat” my father thought was something he may have in his “next lifetime”.
Why do I say all this? Try giving a 9yo this opportunity today. Unions and do-gooders will come down on the employer like a ton of bricks yelling “Slave labour!!” Insurance will “kill” you. I have had ample opportunity to give kids “exposure” in my company but I can’t. (I do find other surreptitious ways but that’s another story.) If we are to grow as a nation we need to start with our very young so that they can appreciate the fact that an employer wants something for the money he/she spends on you. If you want more money, show the employer that you can bring them more value to his business. If you want a start you should be able to negotiate with your prospective employer to work for free to show your worth. Don’t consider it as doing HIM a favour, because in fact if HE didn’t take the risk of that venture, YOU will not have a door to knock on so that you can gain free experience and training. Believe me, when someone accepts, these terms and is competing with someone who says “stuff you!!” to this proposal, the former will achieve their goal long before the latter (if the latter ever does).
Sure there is nothing perfect in this world, but there is much very close to it. All you need to do is seek it out. If I told you that there is $10 million dollars on that hill over there but you will have to walk through a sewer for a while to get to it, then it’s yours. How many of you would do it?
Just prior to his death, the story goes, Isaac was to give his blessings to his first born son, Esau. Isaac was very old and could no longer see, and the only way he was able to identify his sons was by touching them. Esau was quite hairy, we are told, while his younger half-brother, Jacob, was not.
But Jacob wanted to receive the blessings of his father, which rightfully, by tradition, belonged to Esau. So, with the connivance of his mother, Jocob put on himself some animal skins which would mislead his own father as to his true identity, and took his father’s favourite meal to him, and asked for his blessings. Isaac fell for the ruse, and Jacob and his seed became the inheritors of Isaac’s blessings, and Isaac, we are told, was very much a favourite of God.
And so was Esau cheated out of his inheritance, and all the best of God’s blessings were bestowed onto a dishonourable cheat and his seed. And so, in this same fashion, the cheating and screwing of outsiders is all in a day’s work in the service of God and his chosen people. It all fits, and it is all good and justified within these people’s minds. They are, after all, only doing God’s work, and using methods and approaches that are clearly sanctioned in their religious texts.
You can read it all in Genesis, Chapter 27, but the blessings were these:
“… God give thee of the dew of heaven, and the fatness of the earth, and plenty of corn and wine; Let people serve thee, and nations bow down to thee: be lord over thy brethren, and let thy mother’s sons bow down to thee: cursed be every one that curseth thee, and blessed be he that blesseth thee.”
Lloyd Blankfein, you see, is, after all, doing God’s work. What else, one might ask, do you want to know?
CB @ 46:
Yes, i guess you could pay $5 per hour, but my guess is that you’d be making more profit than you need to in order to make your business worthwhile and self sustaining. I could therefore open a similar business and pay my staff $6 and hour to do similar work, and your staff would then either come work for me or you would offer them more.
Eventually equilibrium is reached at a level where competition ensures that the maximum hourly rate is payed.
This is turn allows are respective businesses to thrive and flourish (with government/socialist interference) and so allows us to grow our businesses further. This in turn gives us greater capacity to employ even more people at the best possible rate (to ourselves and to our employees due to competition).
I therefore dont accept this trend towards zero wages – it simply wont happen.
sorry – finger trouble.
that should read:
This is turn allows OUR respective businesses to thrive and flourish (withOUT government/socialist interference) and so allows us to grow our businesses further.
Just DELTA subject again back to Ozz’s housing bubble…
Am looking at Chris Materson’s crash course mentioned earlier by CB and found the DEFINITION of an ASSET BUBBLE rather illuminating:
“A bubble exists when asset price inflation rises beyond what incomes can sustain.”
Savvy???
So to our few property bulls here, do you still think Ozz is not in a housing bubble???
check out:
http://www.chrismartenson.com/crashcourse/chapter-15-bubbles
brilliant!
Should be a wakeup call for all rational thinking people
Sorry, Esau was Jacob’s twin brother, and so, from that perspective, Jacob’s treachery is even worse.
Sandra, $5 per hour is already too much, if the labour force is truly liberalised and people here have to compete with overseas people who will work for $2 a day. With literally starving millions, you would have people working just for their food and drink.
Fitch #30..Greece was occupied by the Turks for 300 years. the Greeks never, surrendered their Christianity, or traditions, even under threat of death. It was forbidden to be taught in schools. It was whispered in the shadows but endured. It took 300 years but the “good men” (and that includes the women) of the time never gave up and taught the next generation, and the next.. etc. the truth, which eventually became triumphant. Yes it’s tough and only the tough will endure, but endure they will and triumphant they will be. If I don’t see it in my time, then I’m content with the fact that I leave the next generation, the credentials to carry the fight.
Sandra – two thoughts about bubbles:
1. The definition is too wide, too slippery, for determining with certainty whether some asset category is or is not in a bubble. Even in our present case, if the money printers keep on printing money and wages rise strongly, you ain’t seen nothing yet about how high house prices could go.
2. Even if there is a bubble, we have the problem of determining whether, and when, it might crash. If house prices, for example, tripple from here before crashing by 50%, other things being equal, the rational thing would be to buy now, instead of waiting for the crash. Do you see my point?
Nick, thank you for sharing with us these beautiful, most instructive stories, first hand from your own life experience. They hark back to the days when fundamental values and lessons were taught early to the younger generation. One day we might be forced to be grounded again in old fashioned ways, and those appropriately taught and disposed will have a headstart once again over those who have their heads stuffed with little else than attitude.
for those who doubt the performance of gold as a safe haven against the fiat currencies of the world in recent times.
http://edegrootinsights.blogspot.com/2010/03/global-fiat-gold-prices.html
It’s the site of the best cash-making machine that global capitalism has ever produced, and, some say, a political force more powerful than governments. The people who work behind the brass-trim glass doors make more money than some countries do. They are the rainmakers’ rainmakers, the biggest swinging dicks in the financial jungle. Their assets total $1 trillion, their annual revenues run into the tens of billions, and their profits are in the billions, which they distribute liberally among themselves. Average pay this recessionary year for the 30,000 staff is expected to be a record $700,000. Top earners will get tens of millions, several hundred thousand times more than a cleaner at the firm. When they have finished getting “filthy rich by 40″, as the company saying goes, these alpha dogs don’t put their feet up. They parachute into some of the most senior political posts in the US and beyond, prompting accusations that they “rule the world”. Number 85 Broad Street is the home of Goldman Sachs.
Sandra@56 – I am no property bull, but the current prices still can be sustained.
SV… I believe that the dollar value of houses will remain pretty constant to today’s levels, however, the “real” value of that “dollar sum” will deteriorate. Similar to our goods at the supermarket. Price stays the same but the “grams per packet” are less.
cb…it’s my pleasure. ” give a man a fish and he will eat for a day. Teach a man to fish and he will eat for the rest of his life”
SV @ 65:
That’s exactly what’s said during any bubble.
Oh, here’s another classic saying during typical bubbles:
“Oh, it’s different here!”
or even better
“This time it’s different!”
If you think the current income to debt levels (in AU) are sustainable i’m afraid you’re not in touch with reality. Nowhere on earth have property prices/income levels of this rate (in Australia) been sustained for any period of time.
CB @ 61:
That’s just it – income is not rising strongly at all. Except maybe those of CEO’s and others in positions of power.
I guess one could think the way you say and say that housing may still triple in price before they crash. but i’d have to say that would be impossible – given that incomes are falling ever more behind.
But i guess that’s another good indication that we are in a bubble and not too far from bursting point – the fact that people actually think that way …
Most Australians believe that there WILL be another idiot just as stupid who will be willing to pay MORE for their overpriced house than they payed for it, therefore they cant lose!!
The stupidity of it all just defies all logic!
CB @ 13:
Indeed – it’s most informative to see this explained in such a masterful way.
It illustrates what i’ve been saying all along – that Inflation (CPI) and unemployment figures are being grossly understated purposefully by government. These figures are just plain BS!
Nick @ 66:
and you believe this why?
Because inflation in Ozz will increase ten fold within a matter of a couple of years?
Or perhaps because Australia is ‘different’?
House prices being two to three times as much (compared to income) as what they should be certainly wont be corrected by a subtle, slow correction by inflation… lol
I repeat the definition of a bubble:
“A bubble exists when asset price inflation rises beyond what incomes can sustain.”
As far as how much will it drop by – well the prices at the end of a bubble crash are what they were before the bubble began. So get ready for a really big drop!
Have another look at:
http://www.chrismartenson.com/crashcourse/chapter-15-bubbles
I know… i’m repeating myself, but some people obviously dont catch on quickly!
Just thinking out loud. Why don’t we raise the minimum wage to $11.00 per hour? Then everybody will qualify for a home loan. Todays Businessday is chock full of good news. (1) “Melbourne house prices on fire” and no one’s getting burnt. (2) “Bank’s Housing Squeeze” What? (3) “Plenty of Force left in Bull” seems the stock market has just taken a rest and it’ll be business as usual anytime soon. (4) “First Home Buyers Feel the Price Pain” please refer to 1 & 2. (5) This is the best “RBA Put Heat on Lehman Over Accounting” it seems that JPMorgan and Citigroup helped cause the collapse of Lehman Bros…..Well I never.
All this on a Sunday.
The abattoir is quite cleverly constructed. The meat stock is herded through an automatic door one at a time and into a maze of corridors just long enough for it not to be able to see around the corner. When it reaches the end and its fate is complete it’s impossible for it to save itself.
@ 68,69,70
its all part of a plan ,which will un-fold soon ……..the new Greecstralia??
thats why Kompliant Rudd’s jumping everywhere ..he knows but just cant say
@ 72 “”"Just thinking out loud. Why don’t we raise the minimum wage to $11.09 per hour? Then everybody will qualify for a home loan. “”
is a 5 car-port & manicured gardens included?
sandra #71….I’m of the belief that we are headed for difficult times to put it mildly. I have known this for at least 15 years but have watched the market being manipulated so it was difficult to prove through that time. Today however, I feel we have reached a very critical stage in the world of currency and debt.
For me to assume that it can go on for another 15 years, would be highly naïve and against my training and better judgement. Hence, I have sold property of late and I am pleased to have done so. I cannot accept that world real estate is crashing and that Oz will be immune from this, especially considering our debt level. I had remarked some time ago about the similarity of Oz to Nero in that we think we can “fiddle while Rome burns”.
Do I believe that R/E in Oz will crash? Highly possible, but if the manipulators come to play then it may happen by stealth i.e. as stated in #66. Either way R/E will lose. What I also believe is that gold is about to rise substantially and in coming years, to a level that will give us “nose bleed”.
Look at this chart. It shows the inflation adjusted REAL value of gold from 1970 till now. If we think that gold has reached a record high, we should think again. I’ve bought gold since 1998. It’s outperformed all my assets and each dip I buy more. People I know who invested heavily in shares and super are today sitting where they were in 2000 (some even worse).
http://matterhornassetmanagement.com/wp-content/uploads/2010/02/gold-inflation-adj.-10.2.10.gif
oh and Sandra, I have watch Chris Martenson’s work and countless others with similar message. That’s why I have been aware of this for over 15 years. I am a “big picture” man. that’s why I never believed in Ozone holes, Climate Change, WOMD in Iraq, 9/11…etc..etc…etc..
Hey! that must make me a conspiracy nut??
Nick @ 77 when in the history of mankind has it been easier to conspire?
When in the past has it been easier to spread dis-information and propaganda so readily and effectively and when since the industrial revolution has it been the goal of state run schools whether by decree or through just plain indifference to produce under-achievers?
Fitch….I agree!!
I remember sitting with my twin daughters watching highlights during the last Olympic Games. We kept switching between that and the 7.30 report on the ABC. A spokeswoman from General Motors was explaining that GM had retracted from 404 day production leads to just one day. This wasn’t the first sign of instability but for me it was all I needed to hear to be convinced that things would get very much worse.
I told them both that when these games are over the games will begin. I told them that this was worse than anything that had come before and that this would have far reaching financial and social consequences and that there would be armed conflict as a result.
They both laughed nervously and promptly changed the subject. They are 21 and have achieved their goals to date and have set many more goals for themselves so it was really not something they wanted to think about.
Since then they have both reminded me about those comments on several occasions and asked me what we should do next?
I wish I knew.
Etch @ 64 I that something else you cut and pasted in jest? Or are you getting the picture?
cb @ 41 To the best of my knowledge oz banks have packaged up some mbs products most of which were sold of to second tier lenders and then capitalised. I think Herr Rudd bailed them out to $8b some 6 or 8 months ago. Interestingly though oz banks did venture out to NZ and the pacific to hone their hunter killer skills during the orge. Asside from dodging taxes in NZ I don’t know what else they got up to. In those days it was………..everybody’s doin it, doin it, doin it.
As for the $13.5T they probably got a chunk of Greece, Dubai, Iceland, Ireland……
Fitch #80…interesting you say that. I felt the same, and again during the recent winter Olympics. Others in my “circle” felt the same. The greater the spectacle, the more I get that uncomfortable feeling. I commented on the Olympics back in the 30’s where Hitler attended, little did all those young athletes and spectators know what lay ahead of them.
If you study the reason why the Coliseum in Rome was built you will shudder at the similarities of why we are so consumed with sports. Just like back then, it is to keep our eye off the crumbling empire around us.
Nick @ 77:
Seems as if we agree then on most of the issues you mentioned.
Wow you guys really hit the weed on the weekend.
Fitch @ 83 – sorry mate that info is just wrong, and it apparently is the best of your knowledge.
Cheers all…
Don’t know if you guys have seen this before, but there is a recent interview with Joye on Switzer, which I must say, is very clear and well-articulated. Here is the link:
http://www.switzer.com.au/video/joye-march
Cb .#86… as I’m just a layman, I’m trying to understand what Joye is saying.
So he says that Oz population is going to be 40m people, almost double today’s population….what are they going to be doing?
If we have had water restrictions in recent years due to drought, what are we going to do in the next drought if the population is doubled.
If all our manufacturing has gone off-shore, what jobs will the extra 20 million be doing? Or are they all going to be in the construction industry. If we can’t get our current unemployed, employed, what are the chances of finding jobs for the next 20 million?
here is a nice little article on the role of central banks.
http://www.financialpost.com/news-sectors/economy/story.html?id=2668127
Nick, would you know where the number of 40m (62% increase) comes from? Is this just Rudd’s vision for “big Australia”?
I checked on the ABS site, and they have these forecasts, but they state their assumptions up-front, without commenting on their validity.
Nick – those are very good questions, indeed, and we can only guess at Rudd’s and Joye’s assumptions. Presumably, a certain percentage of them are going to be absorbed by the larger service industry we are going to have to meet the needs and wants of a doubled population, and that shouldn’t be a negligible percentage.
But, as for the rest, I am not so sure. We will have to build a lot of houses and roads and other infrastructure, as your questions imply, such as desalination plants and probably quite a few power stations, so these infrastructure projects will absorb another big chunk of them.
And, for remaining ones, we could send them out into the Pilbara do dig up red dirt and and hope to god that the Chinese will want to employ them for it. Or, if we had sense, we could simply make sure that the surplus will be millionaires who will bring their savings with them and retire amongst us in the manner in which we all aspire to. Sorry, I am becoming flippant. Your suggestions?
lol, SV, what could be easier. They are coming by the boatload by both sea and air, and there are plenty more they come from, to be sure. You must have meant something more specific. What was it?
@87
yeah so sounds like fun ,not many jobs,low paid ,house prices thru the roof plus the proverbial typical australian beuracratic BS to do anything
i will be voting CAP AUSTRALIA 23 MILL PARTY,,farrg them all.
they gonna turn australia into a slum
wat about Malta ? how many millions people they bringing in ????????????????????????????????????
in the old days increasing pop. was a method to tharwth ur enemy
to counteract with more numbers
now dosnt matter how many pop. a countrys got they just send it an atom bomb
Nick @ 87:
Apparently, we’ll all be selling property to each other at ever increasingly bloated prices…
you know, as in a Ponzi scheme!
lol
CB @ 92:
yup! and as they offload off the boat, they’re ready to put ‘upward pressure’ on house prices here in Ozz, further supporting ‘underlying demand’…
lol
CB – my question was about where the projections are coming from, not the actual people. lol, I agree with Sandra – just mere sighting of a boat leaving Indonesian waters causes price jumps in Sydney!
Here is some more on the same questions – I am still reading it.
http://www.businessspectator.com.au/bs.nsf/Article/40-million-people-by-2050-pd20100315-3JUYQ?OpenDocument&src=kgb
Well, you know the oft-parroted line: In the market expectation is everything. So, if people expect population pressures to keep pushing the cost of land upwards, then nobody will want to sell just yet, not at these prices, unless they are basolutely forced to. That would mean the elimination of a significant segment of the sellers who otherwise might have sold, but why would anybody let go of a good thing, unless they absolutely must?
As to whether those expectations are rational or not, that is an entire different question. But even here one ignores the warning at one’s peril, that the market can stay irrational much longer than anyone would expect, or could stay solvent. And this last principle is true in either direction, as much up, as down.
CB – Was that I-saac bloke a founder of Goldman S-saac ?
Seems to me jobs going off-shore go to countries where there is a high level of unemploment & no welfare – so if you don’t work, you & your family don’t eat.
Under those terms $ 3.50 a day become a bloody good rate for the employee when there is a good chance you were going to do nothing that day & starve (and better for the employer than paying $12.00 an hour in the Western world).
Banning the minimum wage works better when there is low unemployment & employers have to compete for workers.
cb, nick and co. – I think you will find that Joye is not necessarily advocating a 40 Million population, but suggesting that it is likely with current immigration numbers. He is therefore worried that there doesn’t seem to be a coherent National Policy in place on where they will live, work, infrastructure, housing, schools, hospitals and medical etc.
I think it’s a fair question that we should all have a say in, and government should have a policy in place rather that just letting them come and then they are on their own, with state governments and councils left to flounder with the problems of a surging population that they didn’t forsee.
If the population surges by that much it is hard to not see house prices rising in the future, even if in the short term they did fall.
http://www.switzer.com.au/video/barnaby-joyce
I have mentioned earlier about not confusing meekness with weakness, when it comes to a Greek. Have a look at this interview with Harry Markopoulos regarding Madoff. He reveals a bombshell….. that really doesn’t surprise a Greek. lol. Remember I said the Spartans of today may not have “six packs” but they still have a passion for justice….approx. 7 mins
http://www.msnbc.msn.com/id/26184891/vp/35642626#35642626
PF – Yes, that is how read Joye. He makes no argument as to whether a big Australia is a good thing or bad thing. And he is right that the necessary infrastructure be planned and built in good time. Imagine doubling our big cities and making no significant improvements and expansion to their infrastructure. Not an attractive prospect, notwithstanding the rosy implications for land speculators.
Peter Fraser @ 86 Cheers to you too!
“About the Australian Securitisation Forum
The ASF is the peak body representing the Australian securitisation industry. ASF represents
more than 120 organisations including Australia’s leading banks, non-bank mortgage
providers, investment managers, ratings agencies and other organisations operating within
the sector. The ASF’s basic mission is:”
You can read the rest @ http://securitisation.com.au/docs/discussionpaper.pdf
“The ‘Rudd Bank’ puts taxpayers last in the rush to help favoured industries says Stephen Kirchner in the Australian Financial Review, 28 January 09
The Rudd government’s $2 billion intervention to provide loans to the commercial property sector is rationalised as a measure to save jobs, but once again puts the interests of business and financial institutions ahead of those of consumers and taxpayers.
This latest intervention in financial intermediation follows the $8 billion the government is investing in residential mortgage-backed securities.”
The rest @ http://www.cis.org.au/executive_highlights/EH2009/eh75509.html
Lastly:
Australia’s banks are losing their vice-like grip on New Zealand’s banking market, with market research suggesting that most are losing market share in terms of retail banking customers, and increasing their revenue at below the rate of the overall industry.
A report released by Merrill Lynch and based on market research by Roy Morgan says that of the roughly 180,000 New Zealanders who change financial institutions each year, almost half move outside the five largest banks – all of which are now controlled by Australia’s big four.
“While part of this loss is offset by customer acquisitions from smaller institutions and market growth, we still believe the major banks to be in a position of net customer outflow,” the report says.
“This in itself begs the question as to why customers are leaving the big banks. The answer, according to Roy Morgan Research, is price and service.”
Get it our big 4 four own their big 5……..
Just how many spooks can you fit into 4 paragraphs. “Price and service? What else could they say on their retainer?
Surely I have drawn my own conclusions but I can’t see how I would ever arrive at yours.
Cheers!
Puntpal, Puntpal… where art thou Puntpal.
Some quotes for your consideration:
“During times of universal deceit, telling the truth becomes a revolutionary act” George Orwell
“It’s discouraging to think how many people are shocked by honesty and how few by deceit.” Noel Coward
“One deceit needs many others, and so the whole house is built in the air and must soon come to the ground” Baltasar Gracian
Fitch I assume you have posted those quotes with the best of intentions, but in your post @ 83 you state “To the best of my knowledge oz banks have packaged up some mbs products most of which were sold of to second tier lenders ” which is quite untrue. The government did buy $8M of RMBS but they were not lent by the banks and packaged off to second tier lenders. Where do you get these ideas from.
Please read your own quotes and try to abide by them, and don’t make up the truth.
PF- can u expalin where the BANKS $13.5 TRILL is,
ties up eventually or is that just some little debt “not to be concerned about”?
this may help lift some of the smoke and mirrors that cloud the way banks work. It all looks good until it doesn’t. 10 mins
http://www.msnbc.msn.com/id/21134540/vp/35841681#35841681
etch – exactly what money are you talking about. please reference it or provide a link.
pf- its our 4 major banks they have in loans,cd’s,deriverates etc i’m sure cb will know bout em
PF – I cannot give you a specific reference, but Sayce has written about it before, and I have seen it referenced elsewhere, probably to the RBA’s website, that the big 4 have some 13T worth of assets off balance sheet. The question is, what are these made up of, and what are they really worth?
13trill$ of smok”n”mirror
The silence of the lamb …
This is the worry, and what should keep us up awake at night. If I understand it right, shareholder equity is less than 1% in value of the offbalance sheet assets of Australian banks. Talk about living on the edge.
Bomb ticking for off-balance banks
http://www.theaustralian.com.au/news/bomb-ticking-for-off-balance-banks/story-e6frg7f6-1111115574495
So, the question is: When these assets go pear shaped, who will be tapped for saving our banks? My guess: You and I. And yours?
etch – do you mean the loans (listed as assets in tables 1 and loans in table 2. Deposits are listed as liabilities in table 3.
I don’t know what the article (that cb referred to) means in relation to off balance sheet assets. I really can’t enlighten you on that, but these matters are strictly controlled so I wouldn’t panic.
cb @ 113, A loan book is worth the sum of every loan in the book. We have an arrears default rate of about 0.6% I believe so the odds are the value of the book is at a premium, not a discount.
yes PF -dont panic,just hold on tight ,grease is the word
i’m worried bout me savings in these “PONZI-TUTIONS”
* Adele Ferguson * From: The Australian* February 18, 2008 12:00
A TICKING bomb for the banking sector is its off-balance sheet activities, which at last count stood at $12.9 trillion.
Australian banks have a big exposure to derivative markets. Their total shareholder value of $110 billion is dwarfed by the size of the banks’ collective exposure to derivative markets of $12.9 trillion.
Put simply, the total derivative positions of the banks are 117 times as big as the banks’ shareholder value. If even 1 per cent of these derivatives contracts default because third parties at the other end get into trouble, the whole shareholder wealth would be wiped out and our banks could be broke.
Given total bank assets are $2.1 trillion, it begs the question why Australia’s banks have exposure to $12.9 trillion of derivatives positions. All banks hedge to reduce risk, but this is a big amount of hedging.
For example, Westpac has a face value of $1.4 trillion in derivatives at September 30, 2007, compared with an equity base of $16 billion, which is a multiple of almost 100 times.
The banks will argue they have outstanding risk management procedures and derivative arrangements have offsets so that only a net amount is at risk. Indeed, the Reserve Bank estimates that at September 30, 2007, the total credit risk and exposure of the banks to off-balance-sheet activity is $140 billion.
A more cynical observer would say the acquiescence of bank regulators to banks running off-balance-sheet liabilities greater than their capital just adds another layer of gearing.
But the reality is most are too big to be allowed to fail and wipe out their shareholders’ funds. Banks worldwide are in a favoured position. While most are listed entities, they can always count on the shareholders being underwritten by the taxpayer in a crunch. The most recent examples of this were Northern Bank in Britain, which reportedly had about €25 billion ($54 billion) pumped in by the Bank of England, and Societie General attracted immediate support from the French Government. In the US, the Federal Reserve has been helping out its commercial and investment banks.
There is no denying that the banks have slick risk-management systems and, as long as there are no defaults, everything will keep on humming.
But the potential magnitude of the problem becomes even greater as the banks dominate the debt and equity of the country through their dominance of funds management.
As one investor said: “Do the bank balance sheets show a true picture? Well that’s not what they are for. They are basically a disclaimer exercise.”
But turning from the off-balance sheet world, to the on-balance sheet world, including the stock market, Australian banks have taken a walloping, none more than NAB, which is now trading at the same level it was nine years ago when the bank was concerned it was a sitting duck to foreign predators.
Apart from hedge funds targeting the banks, investors are becoming increasingly uneasy at the exposures the banks will have to corporate failures.
The reality is that as the sub-prime mortgage crisis continues to unwind, more corporate defaults will take place. While, on average, Australian corporations are in better shape, in terms of profitability and gearing, there is a group of financially engineered companies with low profitability that have piled up a mass of junk bond debt that will soon come to refinancing at much higher spreads. And as monoline insurers look wobbly, this will add to the difficulty in getting a refinancing package.
Already companies such as Centro, MFS and RAMS Home Loans have suffered the plight or tough credit markets. Others are sure to follow.
NAB has the largest market share in commercial lending and the second-highest transaction banking market share, which makes it a strong candidate for having the riskiest loan book with regard to Australian commercial lending.
However, an analysis by Wilson HTM of listed companies that have lost more than 20 per cent and more than 50 per cent of their market capitalisation in the past year, NAB may have the lowest exposure of all the banks to poorly performing companies when ranked by debt outstanding.
In the case of the Commonwealth Bank, its profit results epitomised some of the challenges facing the banking sector in Australia: rising expenses, rising cost of debt and murky bad and doubtful debt exposure.
Commonwealth Bank’s latest results revealed bad and doubtful debt charges rose 40 per cent from the first half and a 71 per cent increase from the previous corresponding period.
Reported gross impaired assets were up 66 per cent from $338 million at December 31, 2006 to $562 million at December 31, 2007.
New and increased impaired assets were $566million at the end of December 31, 167 per cent of gross impaired assets at December 31, 2006.
Given the statements by the Reserve Bank suggesting at least two further rate rises in Australia, this will put a great deal of pressure on the many highly geared consumers and lead to an increase in loan defaults. As a consequence, many analysts are increasing their bad and doubtful debt charges in the retail banking sector both this year and next year.
UBS put together a watch-list of potential problem loans, including Centro, Countrywide Financial, MFS, Allco and Allco Principals Trust, to which they have lent a collective $5.7 billion. It suggests that Centro has a $500 million unsecured loan and $700 million secured loan with ANZ, a $160 million unsecured loan and $1 billion secured loan with the Commonwealth Bank and a $350 million unsecured loan and $750 million secured loan with NAB.
The other big risk is Countrywide, which has a $150million loan with ANZ, $300 million loan with Commonwealth Bank, $300 million loan with NAB and $100 million loan with Westpac.
There is little doubt banks have undertaken extended value-destroying lending, based on declining underwriting standards. But as the cost of debt increases and the shake-out in credit markets triggers concern about losses in syndicates or companies involving the banks, including ANZ’s exposure to Lance Rosenberg’s embattled broking house Tricom, it is premature to discuss systemic issues.
But for banks, with expanding funding cost pressures, and Commonwealth Bank’s results showing a blowout in expenses, most banks will start initiating cost-saving programs. As Wilson HTM analyst Brett Le Mesurier says: “Expense growth is a problem with salaries increasing by 12 per cent over the year, which was the major factor in the high rate of expense growth during the period. This latter feature occurred notwithstanding the refund of $64 million from the Australian Government from over payments of GST.”
For the next couple of years, there is little doubt that the banks will face some challenging times, particularly if some of their off-market activities start to look wobbly. Let’s hope they have a good handle on it.
just off topic for a moment and I refer back about the Patent debate. I had mentioned GM food/patents & monopolies.
read this: http://edegrootinsights.blogspot.com/2010/03/rising-food-prices-may-start-with-seeds.html
etch – no problems – put your money into icebank – they pay high returns……
not the bank of bribie island?
how bout Mar-hoochie-dorye ? ,Gimp-ies Banks?
or your dads bank ,ex-prime Malcolm Fraser
he would’ve stash a few bikkies heH ? lol
the yanks are getting angry….
Bring on the trade war!!!
http://www.businessspectator.com.au/bs.nsf/Article/Germany-and-China-arent-making-sense-pd20100317-3M36P?OpenDocument&src=sph
waty r they getting angry bout ?they owe the money
cant they the crape they cause?
Beware the deflation quicksand
Societe Generale strategist Albert Edwards has plumbed new depths of gloom, forecasting a debt-deflation spiral in the US that will ultimately catapult the world into years of rampant inflation.
they need to raise exports and china’s peg to th USD is making it hard
They are also are sick of the benefits that china’s manufacturers get because of the peg
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