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AUSTRALIAN DIARY

ARCHIVES 1997-2007  --- ARCHIVES 2007 +



21st March 2009.  World of Warcraft.

Since the beginning of 2009, I have been playing WOW.  Nephew Tom (about 25) is the only other player in the immediate family, although it is arguable that Ben (age 8) is also a player.  WOW is a recession proof business, in fact it could be a major beneficiary.  It is cheap (about $AU25/month) and a major time eater.  I dont think it is a public company, and my guess is it will not go IPO until it starts to lose market share.

TOXIC ASSETS IN AUSTRALIA.

Our politicians are blaming overseas players for the creation of the toxic assets that have severely damaged the world banking system.  As mentioned last month, a solution is to divorce the monetary system from the credit system.  Giving people credit is a risk.  Handling their financial (M0, M1) transactions is a risk free transport business.  If players want to take risks, then it's their (or their investor's) money.  They should not have their hand in the till.  Barak's 100% taxation of the obscene bonuses being paid to executives of failed banks is a good start.  Those bankers complaints that "all the talent will leave the banking industry" is an empty threat.  Who would want to hire failed executives?  Their only success was that they obtained a government bailout for their company (which Lehmann executives did not.)

Which brings about mention of Rudd's opinion that the US is the country which originated all the toxic assets.  What about Ireland?  What about Spain?   WHAT ABOUT AUSTRALIA?

Our real estate market is (like that in the USA was) at extreme high value in terms of wages.  The only reason that our bank's real estate mortgages are not classed as "Toxic" is that the market (at least the bottom end of the market) has been supported by the $21,000 "gift" given to new home buyers.  That gift expires in July.  I predict a major adjustment (my guess would be about 8% - 16% downwards) at the bottom end of the real estate market by next August-October.

Our toxic assets arose because Paul Keating created our national superannuation scheme.  A bunch of MBA's whose only qualification is a university degree from a bunch of economics professors (those that can't do, teach) now controls about one trillion dollars of assets, some of which was used to support our local mortgage market, some of which has purchased about one third of the Australian equities market, most of the rest was invested overseas before the Australian Dollar dropped to below US$0.60.

What do you think that the ownership of so many toxic assets might do to the value of our local banking and superannuation corporations?

THE GREAT LAND GRAB.


Recent newspaper reports are that hedge funds are buying up Australian farmland in North Australia.  Looks as though they might be reading this blog.  For instance, in March 2005 I predicted:

IN AUSTRALIA

In Australia there might be some benefit, some harm from global warming.  (That is of course a big "might", because various geographical features such as mountains rarely run north-south to provide a linear transform).  People like Janet Holmes A'Court, (who owns large stretches of near desert in Northern Australia) might benefit from an expanded monsoon season, and farms in east Australia might benefit as the trade winds move south and formerly quasi-desert grazing country becomes rich cropland.  The southwestern tip of Australia (South of Perth and around Adelaide) might turn to desert as the northern limit of the prevailing westerly (the "Freemantle doctor") moves south.  The areas lost to new desert in the south would hopefully be exceeded several times by the areas in the north and east of Australia that would benefit from the south-moving monsoon & trade winds.   Tasmania will warm up.

Of course I am most likely flattering myself.  Undoubtedly other technical people were also able to predict the likely outcome of global warming on our weather patterns.  Although not very many of them found their way into print.


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