29 March 2008


In Australia any citizen who reaches an average level of academic performance can have unpaid access to a university for the purpose of obtaining a degree. No payment need be made for this training until income reaches a quite generous threshold (about $AU35,000 pa). Of all my close family who obtained a degree that way, not one remains in Australia. They are all overseas, in the US or UK or Dubai earning more than they could in Australia (because of our welfare state) and not paying (or likely to) back that $20k to $30k that they owe to we, the taxpayers. And those who will obtain a degree in the next few years have expressed a desire to find permanent work overseas.

John Howard was aware of this outflow, and replaced the dearth of professional talent in Australia by granting temporary visas to professionals from less developed, poorer countries. About the only Australian trained professionals who cannot find well paid overseas work are our liberal educators, like history teachers who tell us that stealing children in the past was wrong, but stealing them now is OK. Under the Howard "work choices" legislation, Australian unemployment fell to around 4% (from a high of 10% under Labour). That legislation was repealed a few days ago. Look out for rapidly rising unemployment from that date.

Our Kevin Rudd, our wet behind the ears PM, wants to fix the "problem" of those professional immigrants (some of whom are stealing union jobs, or at least busting the union monopoly on the supply of labour). The argument seems to be "We must not have all these overseas workers entering Australia, because they are taking jobs from Australians, so lets expand our university system and train more Australians."

Hey Kevin. Reality check. What is to stop all those extra trained professionals from emigrating to where they will get more money?

If you want Australian professionals to stay in Australia, then either (i) pay them as much as they can get overseas, or (2) stop them from leaving till after they have paid off their education debt.

15 March 2008


BANKING. In the Black Tulips post written April 2007 I joined Buffet, Greenspan and Grantham in warning that a really major crash was incipient. Since then I have consistently hewed to that view.

In a post on 22nd September 2007 I suggested that governments should take over M0 and M1 accounts. (M0 & M1 are "on demand" money, e.g. Cash and Cheque). This would not be a great change from what happens at the moment.  The FDIC currently guarantees M0 and M1 money in the US banking system up to $100,000 per deposit and is payable in the USA.

In the past few days the Fed has loaned another $200 billion to prevent failure of Bear Stern. This is in addition to the $140 billion pumped into the world's financial system last August.

The FDIC was set up as a result of the 1929 crash, and was supposed to protect bank depositors against bank failures. Another cause of that '29 crash was supposed to be margin purchases. Back then congress enacted laws that were supposed to prevent buying on margin. Looks like those laws were not very effective.

Back to the present. The monetary system is just too important for it to be under the control of organizations (banks) that manage it for profit. While gold was money, the fact that banks were managed for profit did not matter. Ultimate safety could be achieved by exchanging paper for gold and putting it under the mattress. Now there is no way that a person with over $100,000 of savings can ensure the security of their money against bad investment decisions and inflation.

Hopeful prediction is that the Federal government (Treasury) will assume control of deposits (M1). Maybe not pay much interest, but your money is safe. The various banks will act as agents for collecting and disbursing that money. And congress will doubtless enact more laws to stop margin calls. (yawn).

REAP THE WHIRLWIND. This is a saying which means "to have a serious problem because of a past mistake".

I posted in December 2007 that Kosovo was not for independence. Kosovo has, with tacit approval of NATO, declared independence.

Now Tibet and Turkey are heating up. Spain has new problems. Kosovo has given all of those independence movements new legitimacy and new heart.

Expect more.  The impulse to throw off the yoke is very strong, and does not need much encouragement.

10 March 2008


Mark Vaile has been in the news for taking a business trip to the middle east while a salaried parliamentarian. I guess that he went to conduct delicate baksheesh negotiations.  I gather Trevor Flugge was unavailable, perhaps due to a conflict of interest.

Venezeulan President Hugo Chavez has in the past earned my approval for his democratic approach to Government. He was responsible for introduction of a Grey-Schwartzenegger type amendment to Columbia's constitution. (Whereby the President could be removed from office anytime by popular vote). Right now he is behaving like a bully who has been caught out cheating.

Columbia was quite entitled by recent international practice & protocols (US in Afghanistan, Turkey in Iraq, Russia in the Caucus and probably international law) to attack terrorists operating from Ecuador that Ecuador refused or failed to control. Chavez was humiliated by the revelation that he had become a successful peacemaker by paying a $30 million ransom.

The Australian Labour Party (and the Democrats in the USA) pride themselves on being humanitarian and pro the working man. It never ceases to amaze me that this litany is repeated ad nauseum in the media.

Then the penny dropped. All of those who mouth that litany are either wealthy media unionists or wealthy legal professionals or wealthy trade unionists or wealthy latte drinkers. Actually, their humanitarian impulses are a self serving lie. The party which is pro-pensioners, pro hard working but poor Australians (The ALP is for the "hard working wealthy Australians) is the Liberal Country Party. In the USA the Repubicans are also aligned with the religious right, which taints them somewhat in a supposed non sectarian republic.

Make no mistake. The ALP (and the US Democrats) are a bunch of elitists who think the business of government requires the best brains in the country, which (they will modestly admit) is probably themselves.