Friday, 31 October 2008

A little bit of poaching from the poor

If I have read the data on the World Health Organisation's Global Atlas of the Health Workforce correctly then in 2004 India had 0.6 of a medical physician for every 1000 people. Figures released yesterday by the Australian Institute of Health and Welfare, Australia in 2006 had 2.9 "full-time equivalent (FTE) medical practitioners" for every 1000 people.
We might be complaining in this country about the shortage of doctors - and Australia is still below the OECD average for physicians - but by comparison with Indians we appear to be well serviced. That is a conclusion that sits awkwardly with the decision last month by the Australian Medical Council to give a United States company a contract to open five exam centres in India to streamline the recruitment of overseas-trained doctors. Why the the federal government had gone back on its 2003 pledge not to actively recruit doctors in developing countries, a practice that has been condemned on the basis that it strips highly qualified professionals from the nations that can least afford to lose them, was not explained. "There has been a very careful review of the situation in India, and we have been given instruction that they are no longer part of these sensitive areas," is all that AMC chief executive Ian Frank said on the subject.
So much for the supposed greater concern of a Labor Government to help the world's poor.

Thursday, 30 October 2008

A welcome story

Jewish Americans have traditionally been among the Democratic Party's most reliable supporters. While the Republicans have been doing better for the last 20 years or so, if Jews ran the United States there would be one party government. In the last four presidential races George H.W. Bush received 11% of the Jewish Vote in 1992 . Bob Dole got 16% in 1996. George W. Bush, 19% in 2000, and then 24% in 2004. One of the worries in 2008 for the Democrats when they chose a candidate with Hussein as his second name was that this trend line of a growing Republican share might continue.
Which is why this feature in today's Jerusalem Post will be welcomed by the Obama campaign. It describes how, when Rabbi Capers Funnye Jr. first met Barack Obama, he judged him to be a little shy. "To be fair," the Jerusalem Times relates, "Obama wasn't yet an international celebrity or even running for president. He was just Funnye's cousin Michelle's husband, being dragged to family events filled with her relatives, including Funnye, her grandfather's nephew. Funnye describes Obama at those encounters as curious about his Judaism, since he knew many white Jews but wasn't familiar with the African-American Jewish community."
Australian banks have come in for some ill-informed and unfair criticism - some of it I confess from me - for not passing on to their borrowers all the reductions in official interest rates. This little graph from the Wall Street Journal shows there is nothing unique about the local action. Borrowers around the world have similarly been denied all the benefit of rate reductions by central banks. The increased concern by lenders about getting a premium for risk has been greater than what the custodians of the official rates have given.

The pollster turns politician

Pollster Gary Morgan is putting his abilities to the test. The Morgan Poll man is standing for the job as Lord Mayor of Melbourne. At least he will not be able to do what so many politicians do when they get beaten and blame the information given to him by his pollster! At least this statement in announcing his candidature is true: "I understand the issues that are important to residents,
ratepayers and the business community." He has been researching such things for decades.

Something to give a Republican heart

If I heard Karl Rove correctly on Fox earlier this week there are some 300 opinion polls being published in the United States on this presidential election. There's plenty of opinion in that lot! Never before can an election campaign have been so studiously measured and virtually all of it of late must be depressing for a Republican.
But here's something for conservatives to cling to as voting Tuesday approaches - the underdog effect works in weird and mysterious ways and John McCain is playing it for all he is worth.
There was a piece in the Washington Post this morning that provided what evidence is available for his final efforts to scare voters about things like their tax bill under a President Barack Obama being successful. Accuracy Of Polls a Question In Itself - Skeptics Challenge Assumptions Made gives a rundown on why those 300 pollsters might be getting it wrong. And if you are a nervous nellie Democrat who wants to get even more frightened then have a look at the piece by Mrk Steel in The Independent called I'm frozen with fear – could Obama still lose the election?
With so many opinion polls to keep track of I am opting to rely on the election indicator I compile based on the major betting exchanges operating on this and other elections. It gives Obama an 86% chance of becoming President to 14% for McCain.
As to what the vote will be I note that the Real Clear Politics average of the national polls it takes note of puts it at 49.9% for Obama and 43.9% for McCain. Exclude the support for other minor candidates and the undecideds and the split is 53 to 47 . The Iowa Electronic Market has the punters predicting 54% to 46% as the final outcome on Tuesday.
As to the other election indicators around the world there has been a modest improvement in the chance given to Labour in New Zealand.

Wednesday, 29 October 2008

And who will do the regulating?

If understanding what all those smart people who work for banks and earn big bonuses are up to was easy, then the world would probably not have had this financial crisis. Some bank management would have realised what risks were being taken with the exotic devices dreamed up by their genius underlings and, if they didn't, then surely one of the world's financial regulators would have. That neither group did so illustrates the complexity of the arrangements entered into in the pursuit of a highly leveraged profit to maximise the bonus.
The International Monetary Fund seemed to recognise the difficulty in regulating such dealings in the report it submitted to the Australian Government back in 2006. This Financial System Stability Assessment said that APRA and ASIC, while still relatively young Commonwealth agencies, awere making good progress in building their staffs and putting in place systems and policies. That to me was polite international bureaucratic speak for saying that there was still some way to go!
"It will be important," said the IMF reviewers, "that they maintain this momentum and have the necessary resources and compensation flexibility to attract and retain experienced staff with a solid understanding of the financial sector and the risks inherent in the large institutions."
It certainly makes you wonder whether the regulators are equipped to handle another batch of institutions to supervise as Prime Minister Kevin Rudd has now offered those currently outside the scope of its financial guarantees to depositors.

The quote of the day

Everything is very expensive

An Australian tourist as quoted by the Japan Times on the recent unfavourable movement in exchange rates.

The madness of markets

Nothing better illustrates the occasional madness of markets than the story this morning that for a brief moment last night, Australian time, the German car manufacturer Volkswagen overtook Exxon as the world's biggest company by market value. VW shares peaked at €1,005 in early trading not because that in any way reflects the intrinsic worth of the company but because of what can best be described as a game of financial musical chairs where, as one trader described it, "there are too few chairs for the players."
The song being played by that group of investors called hedge funds when this VW game got started had lyrics suggesting that the price of the stock in Europe's largest car manufacturer would fall as people woke up to the devastation that the world financial crisis would cause to car sales as Germany entered a recession. The hedgers sold short believing they soon could cleverly buy in at lower prices and land a healthy profit.
Then Porsche came along and sang a different tune even louder. It announced on Sunday it had increased its direct stake in VW to 42.6 percent and that its combined stock and options totalled 74 percent. With the German State Government of Lower Saxony owning just over 20 percent, this left a shrinking pool of stock available for the hedge funds to acquire to meet their obligations in repaying the 12 to 15 percent of the company they hyad sold without owning.
Panic set in on Monday and VW's share price, which had started the year at around €150, closed up more than 146 percent at €520 on Monday. It doubled again on Tuesday, vaulting over the €1,000 mark. The current valuation of Volkswagen is greater than all its European and American car making competitors combined!
As if this is not bizarre enough in itself, consider that there are institutions, perhaps even those handling your superannuation money, who use the DAX index of German Stock Exchange prices as a performance benchmark and buy and sell shares in parallel with its movements. Because of the influence of VW on the index, it rose 10 per cent on Tuesday whereas it would have fallen without the VW share price increase. Those institutions linking their investments to the DAX thus had to in in the scramble to buy VW shares as well.
So just remember that when you deal with investment bankers and their wonderfully automated computer programs that your money is in the very best of hands. Just don't expect all of it to end up in yours.

Tuesday, 28 October 2008

Charles Babbage at work

I am grateful to the vice chancellor of La Trobe University, Professor Paul Johnson, for introducing me this morning to the wisdom of the 19th century writer Charles Babbage who argued that the payment of commissions (he called them "bribes") to financial agents would inevitably lead to the mis-selling of investments. No sooner had I read the Professor's piece in the Melbourne Herald Sun than I stumbled across all those stories of executive pay rises which far outstrip thoe of ordinary workers. With the Babbage these in my mind it became clear that the principal reason for the outrageous salary increases of the past decade is the influence of those head hunters and executive pay consultants whose fee depends on the amount of rumuneration that is eventually paid.

The future of Fox

Rupert Murdoch hates backing losers so it will be interesting to see what happens to the Fox News Channel if and when Barack Obama becomes President of the United States with the considerable majority that now seems likely. Fox News has been stridently and quite unfairly anti-Obama throughout the campaign and punishment will surely be on the Democrat agenda should they become the administration.
Look for some sacrificial lambs as the lord and master tries to square off.

Being independent does not make you right

There's a rather naive faith among this Labor Government that as long as they follow the advice of the independent regulators that everything they do will be right. Surely the experience of the last 10 months as a government should have cured them of the belief that being independent makes somebody right. It clearly does not as the commitment of the Reserve Bank to high interest rates for all those months while the financial collapse turned in to a full scale crisis for capitalism showed. The independent regulator was clearly wrong in maintaining that inflation was the major economic problem facing Australia and the Treasurer Wayne Swan and Prime Minister Kevin Rudd therefore wrong in acting upon that advice.

No mention of the "U" word

Trade Minister Simon Crean is stoically making another overseas trip on behalf of his country. By my count his visit to Belgium and Russia beginning yesterday is his twelfth in less than a year. What a price to pay for losing the Labor leadership all those years ago.
Perhaps the one remarkable thing about his press statement giving details of the talks on the Russian leg is that there is no mention of uranium. Last month the parliamentary Treaties Committee questioned whether Australia should be exporting to Russia in light of the invasion of Georgia. The Committee's chairman, Labor backbencher Kelvin Thomson, said at the time he was oncerned that Russia's Prime Minister Vladimir Putin would not abide by the conditions Australia planned to impose on uranium it sold to his country.

Monday, 27 October 2008

Hopefully it is not a lesson from Japan

I have run a graph like this one before in the column I write for but today's savage drop in prices on the Tokyo Stock Exchange gives it even more point.
The collective wisdom of financial advisers the world over to their clients is not to get too concerned about these day to day fluctuations in stock prices. Over the long term the movement in share prices, they say, is inexorably upwards.
But just how long is the long term if you happen to be a Japanese investor? Prices today are back where they were 22 years ago. Anyone who bought in to the market in 1987. 1988 and 1989 is now taking a complete bath.
I well remember how the collective wisdom earlier in the 1980s was that Japanese capitalism was showing the rest of the world how things should be done. If only our workers coule be as productive as theirs, our management as good and our governments as clever! Then we would have prosperity in the western world.
Now I wonder whether the Japanese have merely again been at the vanguard of the development of the capitalist system and are showing us that there is nothing inevitable about continued economic growth. Perhaps share markets in the rest of the world are just belatedly following the Japanese pattern. What if the Dow, the FTSE, the ASX 200 et al are about to follow Tokyo's no-growth lead?
That's a concept to frighten a financial adviser trying to clip the ticket and steal an earn from your superannuation investments.

Perhaps a new law suggested by Peeping Tom scanners

The introduction of full body scanners at Australian airports perhaps is the result of some government department or other looking for a way of spending funds left in the budget basket. These legalised Peeping Tom machines, which are on trial in Adelaide, do not come cheaply with a cost of up to $US200,000 each.
More likely their introduction here and in many other airports around the world is an example of what should be another law - if it can be done it will be done.
What surprises me most is how little outrage has been expressed by Australians at this latest invasion of privacy.

A Japanese example of the second law

I notice that the Japanese Board of Audit has come up with yet more proof of another of Parkinson's laws - that government offices' spending continues to increase until it reaches the volume of their funding.

The Board of Audit examined the use of national government subsidies by 12 prefectural governments, and found accounting irregularities in all of them. The amount of money involved was particularly large in Aichi and Iwate prefectures. In these prefectures, it was common practice for many divisions to place fictitious orders with suppliers in order to make it look as if they had used up funds allocated to them by the end of each fiscal year.

Specifically, they placed fictitious orders with the suppliers at prices equal to their surplus money and asked the firms to keep the surplus money in a practice they called "depositing." If they use the money deposited with the suppliers to pay for goods they actually buy, they can preserve their surplus money beyond the fiscal year. Civil servants devoted a lot of time for such "work", reported the front-page Yoroku column in the Mainichi Shimbun

Sunday, 26 October 2008

Parliament to sit for far too long

Every year when the government announces its plan for parliamentary sittings during the next you can be certain that some pundit or other will write and condemn MPs as lazy good for nothings who hardly go to work at all. So it came to pass that Alan Ramsey outlined on Saturday the Parliament planned to resume on 3 February 2009, after an eight-week Christmas break from December 5., would have MPs then sit for 18 of the following 43 weeks before Parliament adjourns for 2009 on November 26. In all, a fairly thin 68 sitting days. The scheduled program includes extended recesses of seven weeks (April/May), six weeks (July/August) and four weeks (September/October).
To my mind criticism of there being such a short period of actual sitting is misplaced. Parliament is a classic example of C. Northcote Parkinson's law of work expanding to fit the time available. And an expansion of the work of MPs invariably leads to more ways of restricting and restraining we citizens.
My criticism of the planned sitting days for next year is that there will be far too many of them.

Wednesday, 22 October 2008

Pokies people should just tell the truth

Clubs Australia is gearing itself up to deal with an inquiry by the Productivity Commission into gambling. The lobby group's strategy is to pretend that it really just represents a group of concerned citizens as worried as anyone else about the social cost of its product on the small minority of people who fall in to what some people call the "addicted" gambler category.
As a show of its good intentions, the president of Club Australia Peter Newell this week took to the rostrum at the National Press Club to unveil his organisation's six point plan to limit the harmful effects of gambling. Chief among them was what the press quickly dubbed the Dob in a Gambler campaign which see friends and relatives report people losing too much money too regularly to some kind of big brother body which would have the power to ban them from club premises.
It is a scheme that might sound attractive to those who do not think about it but in reality totally impractical as licensed pokie machine palaces want it to be. The gambling clubs, along with their publican colleagues, know that it is the dedicated perpetual losers who give them the majority of their ill gotten gains. Without these problem gamblers their's would not be a profitable business. They might represent just five percent or so of players but they probably represent 50 percent or so of the profits.
Now don't get me wrong. I am a believer in free will. I have personally been a bookmaker and never felt the slightest bit guilty about helping fools lose their money. In life some people are just destined to become flotsam and jestsam and there is little if anything that can be done about it by anyone other than the person themself.
What does annoy me is that people like Clubs Australia want to pretend that they are on the side of those who misguidedly think that actions of governments can change human nature with all its potentially destructive elements.
Personally I prefer the honesty that is currently being expressed in the United States state of Georgia where there is a proposal to legalise slot machines on the ballot paper for the election on the first Tuesday of November. The ordinary people are telling the pollsters that they approve of the pokies as a revenue raising measure for government with the Washington Post reporting yesterday that 62% are in favour with only 36% against and 2% undecided.
Even a third or people who believe there will be undesirable social consequences caused by the slots believe that the government should allow their introduction.
Clubs Australia should learn the lesson and stop trying to play by the rules of the Senator Nick Xenophons of the Australian political world. Just come out and tell the truth: of course there are some adverse impacts on a minority of people caused by poker machines but would you prefer to pay more taxes? The answer in Australia would be no different than in Maryland.

Tuesday, 21 October 2008

What's it got to do with the Government

It is a very sad thing that a young Australian woman on her grand tour of Europe died while visiting the Croatian town of Dubrovnik. Every death in suspicious circumstances is a very sad thing for someone.
What I fail to understand is why this particular death is so special that the Australian Government got involved in the investigation in the first place. Even harder to understand is why the Opposition has decided to give Federal Police Commissioner Mick Keelty a hard time over his force's minor role.
Now I know we have consular officers in embassies around the world and that one of their functions is to help travelling Australians in trouble but they are not meant to be some kind of super nanny. Yet increasingly the politicians are reacting to every slightest bit of public pressure to make them so.
The Lapthorne family are clearly very skilled at the public pressure business and have attracted considerable media attention as they try and find out what happened to Britt. Good luck to them and I hope they eventually find out the cause of death and that a villain, if there is one, is brought to justice.
But I must say I find some of their comments quite over the top. I don't think our Government should have even sent a Federal policeman to Croatia just to appease a grieving family and to give the television networks another angle for a story that attracted them. I certainly would not regard playing grief counsellor to family members as one of that policeman's duties as Liberal Senator George Brandis by his questions at a Senate committee last night seemed to be suggesting.
That being said, I did find it odd that when the silly decision to send an officer was made that the man chosen had a Serbian heritage. We in Australia might be multi cultural in these matters involving the former Yugoslavia but Serbs and Croats in their home lands are not.

Sunday, 19 October 2008

Relaxed, calm and confident

An impressive Malcolm Turnbull on the ABC's The Insiders this morning. The Opposition Leader looked relaxed, calm and confident and forcefully made the point that Kevin Rudd's Labor Government is treating the Parliament with contempt. It really does tell us something about the role of the Parliament in modern day Australian democracy when a Prime Minister can announce a $10.4 billion spending spree outside the chamber and then basically refuse to answer questions inside it.

Thursday, 16 October 2008

Beware the parliamentary sketch writer

Annabel Crabb, the Sydney Morning Herald's political sketch writer (a breed of journalist who take a slightly off centre view of events in Canberra but regularly manage to inform far better than their supposedly less humorous colleagues), is among the nominees in the Commentary, Analysis, Opinion and Critique section of this year's Walkley journalism awards. The chosen contribution from a host of stories written during the last year is the column in which she dubbed the then-opposition leader a Ruddbot. Now that the man is Prime Minister the description looks more apt than ever.
As if to celebrate the nomination, Ms Crabb this morning provides another wonderful insight into the character of the national leader describing him as now speaking "with the clipped air of a military tactician." Kevin Rudd's new enemy is that strange beast he calls "extreme capitalism" which, as the author notes, is not defined but, much like the term "militant Islam", extreme capitalism "coalesces our feelings of anger and condemnation, without offending anyone actually in earshot."
The rubbishing of the Prime Ministerial rhetoric goes on in wonderful fashion.
The danger for Mr Rudd is not that people will have one quick chuckle while reading the Herald but that pointing out all his meaningless references to strategies for action agendas will persuade people that he really is on the verge of becoming a somewhat pompous figure of fun.

Wednesday, 15 October 2008

Fairfax and News Have One Similarity - Going down together

Fairfax chief executive officer David Kirk has one characteristic of the journalists he rules over: he is happy enough for his papers to hand it out but thin skinned when it comes to taking it. I'm not sure what it is that makes those in the media quite so hypocritical on this matter of criticism but it is something I have noticed many times during my 49 years in the profession. David Kirk might himself be a bean counter rather than a journalist but his speech to the Sydney Institute showed him very touchy indeed about having his work questioned.
Singled out for a special display of petulance was Eric Beecher, a former editor of the Fairfax owned Sydney Morning Herald and the current proprietor of a range of news websites including Crikey for which I regularly write.
But I must say it is galling to have to listen to the self-appointed experts prattle from the sidelines. Some people think we should give up the fight. Eric Beecher has been a poisonous critic of our company, for reasons best known to him. He was asked about our future on Lateline in August, and this is what he said:

VIRGINIA TRIOLI: Eric Beecher, what would you do with Fairfax if you got your hands on it tomorrow?
ERIC BEECHER: Well, the first option would be to sell it or break it up and sell it.
That's what I would do.
VIRGINIA TRIOLI: You wouldn't bother with trying to stick with this behemoth?
ERIC BEECHER: Well, the problem is, if you owned 100 per cent of it and there wasn't a share market to deal with, yeah, you could do lots of things with it. You could actually say, as the New York Times does and to some extent the Washington Post, the journalism is the centre of the fabric of what we do and that comes first and we'll deal with the profits separately in some way, but whilst you've got a share register which is just open like there's, no I don't think there's anything you can do.

So there you go, a self-proclaimed champion of the cause of quality journalism in Australia, and publisher of that quality online site, Crikey, telling us to roll over and die. We won’t be throwing in the towel.
CEO Kirk was keen to elaborate on this theme mentioned by Beecher of the restraints imposed on quality journalism by the public company structure of Fairfax without the benefit of a capital structure that separates voting shares from ordinary shares (which is the type of structure in place for The New York Times, the Washington Post and News Corporation, among others). He said at one point:
"Some critics of Fairfax Media point to News Corporation as an example of what should be done to continue to promote quality journalism. I am an admirer of Mr Murdoch and News for all their achievements. But it is critical to recognise that News Corp’s publishing business, because of its corporate structure, scale and voting stock, is simply not subject to the same market requirements for performance as is Fairfax Media."
What Mr Kirk did not refer to is the very similar treatment that the stock market has given to the two media companies despite their different structures. The graph at the top shows the relative performances over the past two years.

Don't mention the war

They are on the verge of going to war again in Cambodia although you might have missed it if you only read Australian newspapers. I didn't notice a story about the growing tensions between Cambodia and neighbouring Thailand when I did my morning survey of the papers for Crikey but it might have been tucked away in one of them somewhere.

Economic Security Strategy

There was a time when governments had mini-budgets. Now we are having an Economic Security Strategy. The spin is clearly king.

Curbing life's pleasures guarantees someone an earn

The Australian Customs Service was congratulating itself again yesterday on its wonderful work in catching yet another smuggler. "Customs continues to crackdown on attempts to smuggle large quantities of cigarettes and tobacco into Australia," its press release trumpeted. "In the latest case, 4.8 million undeclared cigarettes were detected in a shipping container that was landed in Sydney from China."
Now that is a lot of fags but it is only one of more than 45 separate catches of smuggled cigarettes and tobacco since January 2007. All up, some 95 million cigarettes and 280 tonnes of tobacco have been seized, amounting to attempts to evade revenue in excess of $108 million.
Illegal cigarette importing is clearly a massive business. and is yet another example of what happens when government's try to prohibit people from their pleasures. Organised crime is the beneficiary. Every time the do-gooders get their way and government increases the excise on tobacco products the incentive for the smugglers gets greater.

Marks for Malcolm but no votes

Once again Malcolm Turnbull gets full marks for reading the economic situation correctly but yet again it is Kevin Rudd who will get the votes.
First as the Shadow Treasurer and more recently as Leader of the Opposition, the former merchant banker has understood that the fall out from the American banking crisis would be more serious than most people thought.
While Prime Minister Rudd was preaching the need to restrain spending to fight inflation, Turnbull was calling the likelihood of a world wide recession as a far greater danger than rising prices. He wanted a reduction in the size of the government's budget surplus rather than an increase.
It took until yesterday for the Labor Government to agree with him and announce a $A10.4 billion spending package to stimulate the economy.
Alas there are no votes for the Liberals in being right. The credit in politics goes to those who do rather than those who talk. When pensioners get their pre-Christmas handouts it will be Labor that gets the thank yous.