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EYE-BALL’s Herman on – 2012 Overture – Halloween – Glass half full …

October 22, 2012
Links to Previous ‘Herman’ Posts:

3rd oct – 2012 Overture: Twiggy – a metaphor for wafer thin margins … RBA further stimulates economy surprising the stock market!

2nd Oct – The All Ordinaries is a totally misleading index and Australia’s lack of domestic Savings!

18th Sept – A Microcosm of Our Democracy – Auburn City Council elections.

28th Aug – – 2012 Overture – The Northern Fall (Autumn) –

17th Aug:  – A Political Alternative – Australian Community Party –

Aug 6th:   – Shang Yang’s good governance – or is it good faith?

July 21st:   –  Micro Economics – Thoughts and opinions on the Energy Debate!!!

July 18th:   –  A Chronology of Farce – and of a Government who Wonders Why Their Opinion Polls are so low.

July 4th:   –  2012 Overture – The Northern Summer Arrives –

June 16th:   2012 Overture – The Greek Elections

June 2nd:   Creative Destruction …

May 26th:   White Collar Crime – Craig Thomson and Peter Slipper … or just Federal Parliament?

May 17th:   The 2012 Overture Act III

Apr 23rd:   An update on the French Presidential elections and other

Apr 21st:   A Philosophical Appraisal of Social Economic Index… to Capture Wider Social Well Being.

Mar 26th:   The 2012 Overture – A Crappy New Year – Part III.

Feb 14th: Democrazy Part XV – Clinging to Power.

To see more EYE-BALL ‘Herman’ posts:

click here …

– 2012 Overture – Halloween –
– Glass half full
| Author: EYE-BALL’s Herman | 22nd Oct 2012 |
The American Halloween is a festival that stems from the religious saints day of All Souls. November 1 is All Souls Days, therefore on its eve children practice what we understand to be “trick or treat”.

Australia does not support the concept as much as the retailers try to promote it. Retail sales could really be helped by another selling season.

As we approach this November I really see a glass half full. In Europe Spain’s continued position of refusing a bail out is really doing wonders for market psychology. My position on riots in Athens and Madrid remains circumspect, It should never have come to this.

Very importantly the financial markets appear to be connected to the challenges that are in front of us, which definitely wasn’t the case as we approached Thanksgiving and Christmas one year ago. I believe we are starting to economically find a base. The world hotspots will remain a source of deep concern but fear is not a healthy emotion, too often courage is the only answer.

Andrew Liveris of Dow Chemical – see Wikipedia bio here – speaking at the National Press Club recently gave us a truly sanguine speech and for any who may have missed it I highly recommend they might try and catch it on iView. While on that Richard Fidler last Tuesday (October 16th) had Aubrey Brooks a retired Newcastle steel worker on Coversations and I recommend any who may have missed it they try and catch it on podcast.

Andrew Liveris stated so eloquently while Australia has enjoyed it’s mining boom courtesy of China’s industrialisation they have willingly and wantonly exported those jobs to Asia. He started from the perspective that the challenges are controllable, therefore we can fix it.

Dwelling on his thoughts has me absolutely mesmerised why Australia continues to subsidise petrol motors and the production of petrol cars. Shell is in the process of closing it’s Clyde refinery (30/9/2012), and then Caltex will close it’s Kurnell refinery. Shell intends to service the Sydney and greater NSW market by domestic oversupply of refined petrol, whereas Caltex intends for its controlling shareholder Chevron to source refined petrol on the spot Asia markets.

Meanwhile LNG is becoming one of our major exports. Where is the trick, because there is no treat. Buy Aubrey Brooks a beer and if you can afford it make a small contribution to his men of steel foundation and he might give you the insight. This great nation was built on Waratah steel. Waratah steel gave us railways and railway carriages, and skyscrapers, and highways. The steel works were closed in 1997, nearly 2 decades after we floated our currency. What was once Comsteel, then BHP, then Onesteel, is now Arrium and soon too to be foreign owned and controlled. (Still producing steel in Whyalla and big in scrap metal recycling).

Should I spell it out loud and clear. We are subsidising Ford and General Motors to maintain a motor vehicle production capacity. We live by free trade. Free trade is a mantra. Anyone with a different opinion is a goose, caught in a time warp, unable to live in the 21st century. Foreign investment is the only answer. Different multi nationals like Exxon, and Royal Dutch Shell and British Petroleum will always work in our national interest. That is how free markets operate.

Try scanning the 17 logos on http://www.chevron.com/about/history/ – there is not a mention of H C Sleigh or Golden Fleece or any of the Australian history about the Kurnell refinery and Banksmeadow distribution centre. Now Caltex which is half Australian and half Chevron wants us to be beholden to another layer of value added by importing refined petrol from Singapore or other. (Sourced on the spot market). Qantas passengers have become used to paying aviation fuel surcharges.

These thoughts are easily transferred to Cubbie Cotton please see – http://www.abc.net.au/news/2012-09-18/higher-aussie-bids-for-cubbie-knocked-back/4268400

Those naughty naughty journalists from the ABC how dare they suggest the Cubbie Cotton sale is not optimum. It is called free trade you dopes. (You long haired, dope smoking pinko’s.) That is our mantra. Trick or Treat.

I really have trouble discussing the leprechaun who runs Qantas. It goes along the lines, you don’t want to own productive assets! A well structured portfolio of financial claims will always lead to optimal economic performance. Export the jobs now, and reap the rewards later. Trick or Treat. Gees Halloween is fun! What a great American invention!

While dumping on Ford and Holden and Chevron and Qantas how can I say the glass is half full? Let’s go back to the cheerful slap on the bottom delivered by Andrew Liveris. There should also be a retainer for Aubrey Brooks at all future ALP conferences. Labor to his bootstraps and you will really enjoy his explanation of section 6 strikes (labour disruptions on fiercely hot days). Have nominations for Australian of the year closed?

In a recent post I raised the concept of export licenses. We really don’t care who owns Cubbie Farms. We don’t care who is Chief Executive of Qantas or Dow Chemicals. But we do retain sovereignty over the Australian economy. The Western World is somewhat seamless if you forget about the hotspots and ever present threats of disruption. That is foreign affairs, and most of the things that economics can’t answer (uncontrollables).

This is my Christmas gift to Canberra. Get your noses out of the trough, so you can find some time to really see what is going on. You were elected to serve. You were elected to lead!

2012 is about to enter the silly season. It is almost over. 2013 is looking quite rosy comparatively.

On Melbourne Cup day America goes to the polls. It is far too close to call. I still believe Mitt Romney and Paul Ryan will be preparing to take the oval office thereafter but I am not sure enough to have large bets on it. I will do the Aussie thing and confine my gambling to the gee gees.

Today we finish the presidential debates. Those debates are not everything. Romney has enjoyed an opinion poll surge throughout. It started well before the debates. That is the simple truth of an incumbent compared to an alternative. We have several years experience with Obama, only those from Massachusetts know much about Romney and where does Paul Ryan come from?

Trying to explain Romney’s surge many journalists are embarrassed. They have silly reasons to explain like Romney has managed his run better. He only needed to show up at the debates without 2 heads and he would have enjoyed this ratings surge. Obama’s problems always were the economy. Too many Americans out of work. A stagnant economy. Imperceptible growth. Reduced domestic spending. Woeful debt levels. His story about wars on credit cards, but what has been done since?

America out of Iraq and out of Afghanistan by 2014 but not much has changed otherwise.

Wall St is quietly confident. Obama is running a negative campaign. “it is not a 5 point plan’ but a 1 point plan – a different set of rules for the well to do folk to live by”. Romney is very sober, and that is not to do with him being Mormon. He is inspiring. He looks to bi-partisan support. His 25% top tax rate compared to 40% is very radical, but hey this is America, the United States of America.

Warren Buffett gave rise to the tax on the rich being too low “he pays less tax than his secretary” but we haven’t heard much about him since. I believe he is sharpening his pencil. He has famously said “that even Berkshire Hathaway shares are not always a good buy”.

I will be watching for updates on his cutting of tax breaks (deductions) capped at $60,000 but it too is very complex and hard for your average folk to comprehend. (In America they are all folk, whereas in Australia they are all punters).

Dodd Frank was Obama’s real shot at bi partisan politics. Romney says while he supports it he does not support all of it, and will change it. How bi partisan is that?

I can’t touch on Syria, but Benghazi is an albatross. How could the support offered to Libyan rebels be repaid in such an attack? America has lost it’s mojo. Sure Iraq and Afghanistan belong to G W Bush, but he has been gone 4 years now.

Francois Hollande has delivered on his promise to put a super tax on the rich. Europe is so quiet. Francois Hollande was warned this will lead to a flight of capital to tax havens. France has 9 or 11 tiny principalities on its borders, like Monte Carlo or Andorra, but now the European Union is just greater opportunity. Without EU support it is simply politics. It is empty headlines. Trick or Treat. Did the French really invent tax havens over 200 years ago? What was the part of the Suisse?

Sometimes this works. The quiet in Europe is also stability. The market volatility is much lower. Confidence is built on this. Bad news too goes in cycles, it feeds upon itself until it simply wears out.

The American Non Farm Payrolls have now seen 2 lower unemployment stats courtesy of only lower participation factor. But it is working. The ASX breaking (or threatening to break to the topside) of its recent trading range has me watching closely. As predicted Chinese GDP growth has stabilised at 7%. China is absolutely forced to stimulate domestic demand. China’s export markets are simply not buying, not in a position to buy. But you can only stave off replacement and renewal for so long.

Christmas retail sales will be healthy. Not exuberant, but up off lower levels. Maybe slightly better than inflation(Like 4%). Department store sales are simply so sick.

But I still fear for spot iron ore prices and to a lesser extent coal prices. Reverting to Andrew Liveris, 20 years ago Boral had a substantial competitive advantage over its rivals by replacing blue metal in concrete with slag iron. Rumour was they had locked up all of the Port Kembla supply. But concrete price per ton has fallen dramatically in that 20 years in real terms. That is a study in itself – technology, recycled aggregate, new supplies, outsourced delivery etc. With the Newcastle steel mills now closed, and the Port Kembla decline, there is no obvious supply of slag iron. If Bluescope had it’s own supply of iron ore, would things have been different. There is still coal to burn in the Sydney basin. (really bad pun). But we are pondering protection again – don’t go there.

Australia’s politics has just not got any better. America has real hope, but Australia’s politics is mired in absolute void. Last June I was saying do not believe the opinion polls. They predict a Liberal landslide and it is hollow. What will happen when people realise that means Tony Abbott? I am very happy with my overall prophecy.

Tony Abbott was not a real alternative, despite all of the problems besetting the Government. The first party to make ethics their platform will win the next election. The turn of events regarding first Peter Slipper then Michael Williamson, HSU and Craig Thomson and the ongoing stench of AWU all combine to be fatal to the Prime Minister. That includes her Deputy Wayne Swan, and several other support mechanisms. (How good was Bob Brown’s retirement timing)?

With Mitt Romney in the White House the States will go about their business. Until inauguration in January there will be a void. Romney will declare he is on the job already. No one will listen (maybe Wall St), politics over until mid terms of 2014. Michelle Obama’s memoirs will get better audience. (What is Romney’s wife name – we will all know before inauguration) By the northern summer of 2013 economic stats will show positive growth.

In Australia the ALP power brokers will be seeking a salve. They know that a midnight coupe will simply make things worse. They need a new leadership group. I recently heard Kevin Rudd say we all make mistakes. Many feel Krudd is yesterday’s hero. They should try looking up Aubrey Brooks in the Newcastle White Pages. Or maybe getting a headhunter to see if Andrew Liveris is ready to come home to Australia yet.

The opposition party have similar considerations. Is it go with Turnbull or Abbott? The front bench is really going well. There is always a fine tweak to be made. I would suggest that fine tweak would be to forget John Howard. He is the first Australian Prime Minister defeated in his own electorate for good reason. The old axiom is that governments lose elections rather oppositions win them is always true. This government has simply got to go!

I will spend the summer months thinking of a new name for the 2012 Overture column. It has been great fun. There will be other economic posts after US election.

Believing in Sanity is itself Insanity.

EYE-BALL’s ‘Herman’ …

  1. October 22, 2012 at 1:12 pm

    Great article Herman … a convexion of conundrums that further muddy already muddy waters … however the globe emerges is awaited by future generations who will either endure, or be saved by wise men …

    Romney nor Obama have the wisdom … and we still await a messiah …

  2. The Parable
    October 24, 2012 at 5:37 am

    When Obama is President of the United States,
    He eats all the candy and swings on the gates,
    But if Romney becomes the president of the United States,
    You won’t pay taxes, nor get rebates.

  3. Gerry Hatrick
    November 3, 2012 at 12:06 am

    October Non Farm payrolls +171,000. unemployed at 7 9% essentially steady. The S & P is now up 13.8% this year. Do you go long puts on an Obama victory, or long calls on a Romney victory. The December cliff is more bearish through Obama than Romney. The only grace comes through a Romney victory. The result will not be known for many hours, possibly weeks. On the charts the longs are very nervous awaiting a confirmation of the break topside, just hanging in there. On the downside a 15% free fall will be very contagious.

    It is such a tough call. Go Neutral!

  4. The Parable
    November 3, 2012 at 2:47 pm

    Not only is Ohio the litmus test for this presidential race, the issues of coal mining and pollution are being played out in that State. It is a proxy for what develop post election in Australia. Jobs v conservation.

  5. November 3, 2012 at 4:04 pm
  6. Gerry Hatrick
    November 3, 2012 at 5:57 pm

    My sources tell me, Romney will carry the popular vote, he will carry 29 out of 50 states, but will lose under the College vote system. It is so close the margin for error means that elector turnout will be crucial. The bookies are very confident Obama.

    Both Romney and Obama state they can win without Ohio. Stats are that Ohio is 95% chance of determining the winner.

    If Obama wins, Republican will be in substantial trouble for decades to come. The Latino vote will not only mean California is safe Democrats but in future Latino vote will challenge in heartland republican states of Nevada and Texas. Hence or because therefore Romney will close the borders, written off Iowa, Obama promises immigration reform……..

    In 2008 Obama strategically got 52.7% of the popular vote. In 2004 Bush also turned miracles. Sometimes post fitting logics to results can be confusing.

    Last word is Obama;

    but don’t be too sure.

    You can be sure, should Romney lose, you won’t hear much of him in future. The tea party are much more sensational.

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