Home > Current Affairs, Politics - Domestic, The EYE-BALL FMZ - [Financial Markets Zone ], The EYE-BALL GURU > EYE-BALL Guru on – The Walls are crumbling – Government admits High A$ policy is hurting –

EYE-BALL Guru on – The Walls are crumbling – Government admits High A$ policy is hurting –

December 14, 2012
Latest GURU Posts:

– 4th Dec – Retailers and bureaucrats don’t understand – high A$ value responsible for off-shore purchases –

– 19th Nov – Government Expenditures Part I – Department of Prime Minister and Cabinet – DPMC – STAFFING –

– 3rd Nov – Shareholders – Holding back the world – scared money – scared boss’s –

– 31st Oct – Finally – RBA bubble head opens his mouth – He says – $A intervention not needed –

– 25th Oct – Foreign Minister Bob Carr & Wife – An Australian asset –

– 25th Oct – Communications Minister Stephen Conroy – one of Gillard’s Lap-dogs – untrained and unleashed –

– 24th Oct – Climate Change Minister Greg Combet – The Carbon Tax – emissions Trading scheme –

– 24th Oct – Treasurer Wayne Swan – Mini Budget Part 3 – The Clangers keep coming …

– 23rd Oct – Treasurer Wayne Swan – Mini Budget Part 2 – Mortgaging Australia’s Future to appease his ego

– 22nd Oct – Treasurer Wayne Swan – Mini Budget Part 1 – paints a false mirage to protect his legacy –

– 21st Oct – Penny Wong – On the mid-year accounts –

– 16th Oct – The First Home Owners Grant – the fallout and a reflection on a stupid stupid Government policy …

– 10th Oct – Tony Abbott Talks the Talk – but he is on empty when it comes to detail –

To see more GURU posts:

click here …

– The Walls are crumbling –
– Government admits High A$ policy is hurting –
| Author: EYE-BALL Guru | 14th Dec 2012 |
It has taken some time to get a confession out of this Government that the continued high value of the A$ has put this Nation’s ability to compete within the global marketplace at great risk.

Minister for Resources Martin Ferguson made the following comments as reported below:

Investment costs must be cut, warns Martin Ferguson

| Author(s): Lanai Vasek | Date: Dec 14th, 2012 | Link to On-Line Story. |

RESOURCES Minister Martin Ferguson says Australia is still “well placed” to secure investment in the mining sector and maintains the government is committed to returning the budget to surplus.

Mr Ferguson said Australia had a good pipeline of resource projects but must work on reducing the cost of investment if that was to be maintained.

“Australia is still exceptionally well placed from an investment point of view,” Mr Ferguson said today.

“We’ve got a good pipeline of investment but our capacity to maintain that investment pipeline is going to be very much related to our capacity to actually reduce the cost of investing in Australia.”

Mr Ferguson’s comments follow a prediction by the Bureau of Resources and Energy Economics that resources and energy exports would be worth $184 billion in 2012-13, down $9bn on the previous year.

They also follow an analysis by the Minerals Council of Australia, released today, that warns of uncertainty plaguing the mining boom because of rising costs and competition from new supplies in Mongolia, South Africa, China, the US and Indonesia.

The downward revision by BREE places even greater pressure on the Gillard government as it tries to return the budget to surplus before an election due next year, given the reliance on mining revenues.

In the mid-year budget update released in October, the government forecast a surplus of $1.1 billion for 2012/13.

Mr Ferguson said while the drop in commodity prices impacted the budget, the government remained committed to its surplus goal.

“The drop in commodity prices clearly has an impact on the revenue from an Australian point of view and I might say from a state and territory government point of view,” Mr Ferguson said.

“The Treasurer has clearly indicated he remains committed to seeking to achieve a surplus … clearly he has a commitment to seeking to achieve that outcome as does the Prime Minister and the Minister for Finance.”

Opposition Treasury spokesman Joe Hockey said the government needed to come clean on whether or not it would meet its surplus commitment.

Mr Hockey said the government was “gilding the lily” about the state of the budget.

“Labor doesn’t deliver honest surpluses, it’s not in their DNA, it’s not the way they operate,” Mr Hockey said.

“Stop the games, come clean on the real state of the budget, do not continue to deceive the Australian people, do not continue to have organised leaks claiming you are being reluctantly dragged to an economically responsible position.”

Finance Minister Penny Wong said the government was working hard to achieve its surplus.

“We’ve just handed down our mid-year review which has us on track to return to surplus,” she said.

“We took some $16 billion worth of savings in that review … in order to ensure that we maintained our fiscal discipline.”

Senator Wong acknowledged the latest nominal GDP result as well as the global economy and lower commodity prices had made life difficult for many firms in Australia.

“It has certainly made our budget position more difficult.”

Martin Ferguson has to have a grasp of what it has cost Australian exporters, and Australian industry to have lost 35% of its competitive edge.  That being the appreciation of the A$ against the US$ over the last 10 years or so – up from a mean average since the A$ was floated in 1983 of just under A$0.75c, to its current trading levels of A$1.05.

This has not been something that has happened suddenly – it has been a slow grind since the early 2000’s – [see chart below], and the politicians and the bureaucrats advising them have all been asleep at the wheel.

Our Treasurer Mr Swan, who has to be the dumbest of all our past Treasurer’s – thinks along the lines that we have won some sort of economic victory – i.e. a high dollar is a sign of global approval for his economic management – his ego will be the death knell for Australian commerce.  What a dunderhead – Mr Swan either does not get, or is not concerned with the ’cause and effect’ of the high A$ value.

Is the continued loss of Australian jobs enough of a reason for him to subject his ego to a colonoscopy.

Mr Swan does not understand or is not concerned with the notion that Australian commence is no longer a competitive force in the global marketplace.   Mr Swan and Glenn Stevens of the RBA think that Australian’ will overcome – that both have their heads up each other’s arse ‘lickin’ the bowl clean’ so to speak.

Australia labour costs have been pushed higher and for industry and commerce to stay competitive Australian companies are shifting labour and manufacturing off-shore.

Here is a question posed by one of this site’s biggest supporters – why did the Government not try harder to save ‘Bluescope Steel’?  Yet, it was prepared to provide $100’s millions to subsidise and support the GMH, and Ford motor car production plants in Australia?

We mine the ore to make the steel – yet we ship if offshore, China mainly, only to buy it back in consumer trinkets and steal products that the Australian labour force can’t manufacture because of the domestic labor costs.

How long before the Australian public become aware of the real cost of our un-competiveness?  Will it only happen when more pink slips are handed out and we see monster job losses – count the number of age-old companies that have gone bust this year because they can’t compete with overseas imports.  Who is counting the cost of these closures … the jobs lost …

Mr Swan stands in front of the media every month to talk about employment numbers and he never gets asked about this – the unemployment number is an averaged number over 6 years of monthly data, with the current month replacing a number 6 years old – seasonal adjustments factor in as a smooth alignment and the real cost of job losses in the past year become a ripple effect at best …

I call it ‘cookin’ the books’, others who help Governments produce the numbers that make them look good would not agree – but when inflation sensitive items are taken out of the index to as they say – rid the index of rogue numbers’ you have to ask how real or the numbers produced today.

Some years ago unemployment was fiddled with – long term where reallocated and fell from the tree – you have to be a fool to have complete faith in the ABS numbers and how they’re produced.   The ‘sampling’ method may work for metropolitan areas, but it is hopeless in rural communities …

To add to the levity of the mainstream media’s take on the high value of the A$ – ‘The Sydney Morning Herald’ journalist Evan Schwarten thought it was something to jest and make light about.

He wrote in a article published yesterday titled – ‘Dollar: the Steven Bradbury of currency markets’ … one can only struggle to understand such bad-taste commentary from financial journalist’s that provide conclusive proof they have no real understanding in what the continued high value A$ means to the Australian economy …

Why are they not castigating the RBA over its high interest rate policy?  Why not ask questions about alternatives to combat the A$ value – i.e. tariffs, withholding tax adjustments, currency devaluation, negative interest rate penalties, there are many options and Swan and Steven lie there embraced with one another too scared to say ‘NO’ to the big overseas investors.

They’re quite happy to see this Nation raped and pillaged and have all its wealth siphoned off to off-shore depositories.

Mr Schwarten’s article appears below:

Dollar: the Steven Bradbury of currency markets

| Author: Evan Schwarten| Date: Dec 13th, 2012 | Link to On-Line Story. |

The Australian dollar has become the Steven Bradbury of currency markets – ‘winning’ by default because all its rivals fell in a heap.

Like the Aussie skater’s unlikely Olympic medal win, the dollar remains at sky-high levels because of the sloppy performance of its bigger, and normally stronger, counterparts.

By all rights, the dollar should have fallen back below $US1.00 in the past few months; commodity prices have fallen, economic growth has slowed and interest rates are lower and consumers and businesses are generally pretty depressed. But this week it climbed above $US1.05 to reach fresh three-month highs.

ANZ interest rate strategist Andrew Salter expects it to remain around $US1.05 throughout 2013 and possibly hit $US1.10.

It’s not that the Australian economy is doing particularly well, he says, it’s that most major developed economies – Europe, Britain, Japan and the United States – are weak and likely to stay that way.

Furthermore, the US Federal Reserve’s efforts to stimulate growth have pushed the US dollar lower against its Australian counterpart.

‘‘The problem at the moment is that Australia at the moment looks ok but everything else in the world looks pretty poor,’’ he said.

The stubbornly high dollar has caused significant pain to many Australian businesses and farmers – and the situation could get worse in 2013.

Cotton farmer Graham Clapham, from Queensland’s Darling Downs, says the high dollar has been devastating at a time when he should be making a reasonable profits.

Global cotton prices are quite good at the moment, compared to historical levels, but because all trade is done in US dollars, farmer’s aren’t making any money.

‘‘It’s beating up our business financially,’’ he said. ‘‘The return for the Australian cotton grower is probably below the cost of production and that’s occurring at a time when the price (in US dollar terms) is reasonable.’’

He said his greatest fear is that prices fall while the dollar remains high.

‘‘That would be an absolute disaster for the Australian cotton industry.’’

Bank of America Merrill Lynch Australia chief economist Saul Eslake said the high dollar was good news for consumers, but was hurting the economy.

‘‘The high dollar is good for consumers, although increasingly it does encourage them to consume outside of Australia, either by going overseas themselves or by buying overseas,’’ he said. ‘‘But it is not necessarily good for the overall rate of economic growth.’’

He said a high dollar could interfere with the Reserve Bank of Australia’s hopes that underperforming sectors of the economy – like construction, manufacturing and retail – would pick up in 2013 once the boom in mining investment peaked.

‘‘That is really going to make it very difficult for the Reserve Bank to achieve its goal of a baton change from the resources sector to other sectors in terms of driving economic growth,’’ he said.

Despite that, it appears to there is little the RBA can do bring the dollar lower.

Interest rate cuts are normally a good way to push the currency lower, but the dollar remains higher than it was 12 months ago, despite the RBA cutting the cash rate 1.75 percentage points since November 2011.

Mr Salter said the RBA could intervene in currency markets, but the cost of doing so – both financial and to its reputation – would make it very hesitant to do so.

Read more:

For experienced journalist’s to write about the high value A$ as some type of hollow ‘Bradbury’ like victory, it makes light of the serious accountability the media are lacking.

Hell … if they do not understand where the continued high A$ is leading this Nation, what hope is left … economic commentators are aligned with the Government in their thinking and the way they report on stories – where is the independent thinker and the want to challenge the economic policy’s the Government is pursuing?

This is preventable, and if brave politicians were to stand up and take a stand against all the off-shore buyers, speculators, and investors buying the A$ – as a Nation we might have a chance.  Evan Schwarten is right in one thing – the buying pressure for the A$ is about other alternatives not offering the same ripe ‘interest rate differential’, or the ‘capital gain’ capacity, or the friendly RBA approach to wanting to keep the off-shore money here.

There are alternatives – but to just lie down and cower behind a belief that Australia’s prosperity is dependent on overseas investors, and allow them to come here and ‘rape and pillage’ us as a Nation, gives insight to just how weak Mr Swan, this Government, and the RBA are … or is it that just don’t understand what it is they don’t understand.

Returning to Minister Ferguson’s responses … there is enough weakness in his responses for any investigative journalist to probe his understanding of what he is talking about, and his portrayal of the ‘pipeline’ investment he speaks of.  The Treasurer, Mr Swan raves about this ‘pipeline of investment’ as being Australia’s driving force, its saving grace.

He is so far up the chimney stack he can’t see that it will disappear with our continued inability to push our labour and other production cost’s lower.  The world offers too many other cheaper options and international investors play a different game to Mr Swan and his understanding of economics.

This ‘pipeline’ investment will only eventuate whilst Australia offers competitive production costs relative to other alternatives.   Mr Ferguson mentions Mongolia, South Africa, he does not mention Brazil – all three have labour costs a fraction of Australia labour costs.   This will be defining, and whatever solace this Government has placed in a continued mining boom – proves yet again how detached they are from the new and evolving global marketplace.

Australia’s mining boom never really eventuated – it was an illusion.  As ore and coal prices went up, so did the A$ value – in A$ revenue terms the resource product price increases were valued in US$’s, and they were offset by the corresponding rise in A$ value.

The volume of export was the only thing that gave the illusion of a mining boom – that created jobs because there was more work to do – but the bottom line result did not reflect the fall in A$ revenues caused by the rise in the A$ v US$.

It was the same for our farmers, tourism operators, retailers and manufacturers and the like.

Nobody is writing this story and I continue to ask – Why the hell not?

Please – if you found this story to your liking and would like to promote it to your social media contacts – i.e. Twitter, Facebook, or other icon linked account below – please click your favoured Icon(s) to promote the story.  Thankyou.

Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.

The EYE-BALL Guru …

  1. December 14, 2012 at 11:02 am

    The latest OEDC economic forecast for Australia has been released – read report here ;


    The Headline – Australia is in a strong position, but must adapt to take full advantage of rising Asia, OECD says … makes for som einteresting reading … on economic matters the OECD can be a market driver and influence … they are always a lag indicator and it gives them plenty of leeway to adjust figures as things alter …

    The OECD get their data from the ABS, Treasury, and the RBA, what else can they say – they are not truely independent but use internal numbers supplied by Government Departments of the day … who do you believe …

    Ho wdoes Swan serve – the OECD as their early bird mouthpiece … or the Australian people losing their jobs because of his incompetence …

  2. barry
    December 14, 2012 at 11:38 am

    I think you are missing the major issue.

    The present government of Australia is constituted of the Major players in the Fabian Society….with members such as Bob Hawke , Paul Keating , Gough Whitlam , Julia Gillard, and most of the Labor Party.
    Their agenda is to destroy the Australian culture, just as they are doing in England.
    Hence , they don’t care about the qualifications of who they put in office. they only install the people they think can do the most damage to the country.
    Just have a look at the line-up .All dopes , but all very good at destruction.
    And the even dopier Australians are still not aware of what they are doing .

    If you don’t agree with this , I can only assume you are either still a long way from reality , or you are one of them .
    If you are of the latter , I feel sorry for you , as your days are numbered.
    Eventually you will be removed , just as Whitlam was.

    Evil only persists , when good men do nothing .

    Rest assured, the good men are sitting idle .

  3. December 14, 2012 at 11:50 am

    An interesting angle and take Barry – not really sure whether you are trying to shoot the messenger or wallow in the apathy you describe so well …

    Are you a ‘good man’ as you ask of others … if so then what is your answer to right the wrongs …

  4. Gerry Hatrick
    December 14, 2012 at 6:22 pm

    All those mentioned are notable members of the Fabian Society. But to state the Fabian Society wants to wreck the country just like in the UK is an ultra right wing perspective. Hardly considered or rational.

    The original article does not miss the point. A government that is minority, who is there by 4 independents, who don’t bring down this circus of self interest, who constantly miss the real economic perspective through this consistent clutching to power is a very sad day for Australia.

    While Australia might be the envy of the world, there are things that can be done to prepare for the next turn of the page. Our currency crisis is hurting manufacturing sector. It is in fact destroying hard fought gains. Our current level of debt, while low by world standards is high. Are we prepared for quite likely required fiscal stimulus down the track. The two speed economy is hurting middle Australia. The Banks and Miners are more equal than those on median incomes.

    None of what is highlighted makes Hawke or Keating wreckers. It does try to highlight how this current ALP government are a disgrace.

  5. barry
    December 15, 2012 at 5:06 pm

    Seems people here should read ..Agenda 21,,,,, seems this is who our government is working for ….

    And yes , I consider myself a “good man” but I won’t be putting my hand up to save Australia> I’ve had enough experience to realize I would be wasting my time .

    But Ho hum . I just state my opinion. and if that makes me appear to be wallowing in apathy, I guess that’s the message I give across.

    So, that makes me a hypocrite , and that being so , I am wasting my time here.

    Guess I was right the first time …I’ll just get the popcorn out and watch the circus .

    Good luck with that .

  6. December 15, 2012 at 6:12 pm

    Barry – you might think you have the answers, and if you do please share them … your comments are half cryptic and sound of wisdom … but there’re half arsed and not explanatory …

    If the interlect barrier is a concern then by all means troddle off … but if you want to make a difference then make a stand and fight for what you believe in … share your wisdom.

    Whatever the Fabian Society represents to all of its members – it’s a think-tank who also targets members who can give it a higher profile … the think-tank aspect is freedon of expression and I believe in that – the imposing of those beliefs is another thing all together … if the voters say yes in a majority decision, we all have to live it … but if you don’t do your upmost to disagree and fight for what you believe in then you have already lost … maybe the fight has gone and I can identify with that.

  7. barry
    December 15, 2012 at 8:34 pm

    I don’t know about wisdom , or intellect , or whatever else is required.

    I know only one thing , and that is freedom .

    And what I see here is a serious threat to live our lives as we see fit .

    If you do not see that , then we are certainly on different wavelengths.

    Perhaps I do not meet the intellectual requirements to post on sites like this .

    And to be honest . from what I’ve seen and experienced of the intelligentia of today’s society , I’d say they had about as much intellect as a brick.

    So, I’ll just troddle off , and watch , as they make a hash of the country.

    Goodbye, no need to reply , I can se we live in different worlds.

  1. No trackbacks yet.
Comments are closed.
%d bloggers like this: