EYE-BALL Guru on – The Lunacy of Idiots in Charge –

January 18, 2013
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Latest GURU Posts:


– 10th Jan – The ANZ Whitehaven Hoax –


– 5th Jan 2013 – Financial ‘Ghosts’ from the Past – Hawke and Keating v Gillard and Swan –


– 29th Dec – The Great Big Financial Swindle – Part II – The ‘Budget Surplus’ Backflip – Swan tells his own Porkies …


– 22nd Dec – The Great Big Financial Swindle – Part 1 – The ‘Budget Surplus’ Backflip – Swan serves up Senator Wong


– 14th Dec – The Walls are crumbling – Government admits High A$ policy is hurting –


– 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 –


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Title:
– The Lunacy of Idiots in Charge –
| Author: EYE-BALL Guru | 18th Jan 2013 |
The recent attempts by Government and the Unions to come up with ways to counter the cost of the high A$, and its impact on domestic manufacturing, has again shown up the 90’s style thinking of a Government run by Union thugs who have not adapted to the new world order of Global Trade.

In an article published in The Australian today – what really is in question is why it has taken some 12 odd years of an appreciating A$ on global markets for Industry and Government to get serious about the financial cost of a high A$.   The Australian article is pasted below:

Unions demand taxpayer-funded firms buy local


| Author: National Affairs – David Crowe and Andrew Burrell | Date: Jan 18th, 2013 | Link to On-Line Story. |

UNIONS are pressing the Gillard government to impose tighter obligations on companies that receive taxpayer handouts, forcing them to “give back to the community” by purchasing more Australian products and services.

The toughened regime is on the agenda in the final talks over an industry statement due within weeks as Labor and the unions negotiate ways to shield manufacturing and construction companies from the damage inflicted by the higher Australian dollar.

ACTU president Ged Kearney told The Australian that stricter procurement rules had to be an option in the policy response to the pressure on jobs as local employers missed out on the flow-on spending from vast resource projects.

“We can’t be left with an economy that has no manufacturing. A services economy simply can’t survive,” Ms Kearney declared last night. “We must take a long-term view of this, otherwise we’ll be left with a devastating legacy.”

The Australian revealed yesterday that stronger procurement rules for big resource and infrastructure projects would be part of an innovation statement that Julia Gillard and her ministers are preparing for release next month.

While the government does not want to mandate the level of local content a big investor must buy, the union movement is urging the inclusion of stringent requirements on the private sector.

Ms Kearney backed the use of mandatory local content rules as part of the policy outcome.

“It’s something that should be considered,” the ACTU President said.

One option being discussed is a union proposal to make industry assistance for big companies conditional on guarantees that the companies would buy local goods and services rather than imports.

There would be a threshold to apply the rules to the biggest resource and infrastructure projects.

“When people receive assistance from the commonwealth they have an obligation to give back to the community,” said Construction, Forestry, Energy and Mining Union national secretary Michael O’Connor.

Mr O’Connor questioned whether the community was getting the best return from the current level of industry assistance and said there were direct and indirect jobs to be created from stronger procurement rules.

“If the companies are receiving assistance, there should be some obligations on them,” he said.

“It needs to be on the table. And if it’s not being pursued, why not? Explain to taxpayers why it shouldn’t be.”

Mr O’Connor is a member of the government’s manufacturing taskforce, the forum for much of the discussion over the new industry statement.

The government helps industry with $9.8 billion in annual subsidies, tax breaks and tariff concessions.

While carmakers and clothing manufacturers get the biggest aid, the Productivity Commission’s annual survey showed that budgetary assistance to the mining industry climbed to $506 million last financial year.

Canberra changed its procurement rules in 2011 so that companies bidding for more than $20m in work had to sign up to Australian Industry Participation Plans and spend more on local supplies.

Union leaders said the rules for private companies receiving industry assistance could be similar to the commonwealth procurement policy, although it was not clear late yesterday what financial threshold might apply.

The labour movement is said to be comfortable with the government’s overall direction on the new industry statement, being led by Industry Minister Greg Combet.

The nation’s peak steel industry body, the Australian Steel Institute, welcomed the government’s move but warned that new measures must be accompanied by rigorous reporting obligations and strict enforcement.

ASI chief executive Don McDonald said a policy change was urgently needed due to the lack of domestic demand in the steel and heavy engineering sectors.

Mr McDonald pinned much of the blame for the decline on the booming resource sector, which he claimed had imported large amounts of fabricated steel.

“The ASI believes that a key component for better industry engagement, flowing to more jobs, would be a robust Australian Industry Participation Plan process and the ASI has put a detailed AIPP policy prescription to government,” he said.

“To be effective, AIPPs need to be adopted which provide meaningful and transparent disclosure of the levels of engagement and local industry supply by product sector.

“For AIPP processes to support job growth, there need to be clear guidelines on implementation, rigorous reporting obligations and strict enforcement of local content policy.”

Minerals Council of Australia chief executive Mitch Hooke rejected suggestions that mining companies spent too little on local content.

He said that federal government data from 2009 showed the mining industry’s total demand for goods and services was $85.7bn, of which $75.8bn – almost 90 per cent – was supplied by local industry.

More than 50 per cent of iron and steel used by the mining industry was locally supplied and almost two-thirds of structural metal products used by the industry was locally supplied.

Some 12 odd years into an obvious Global shift in how markets respond to economic data – i.e. strong economies encourage offshore investment driving up the currency … and ultimately as the cycle of this off-shore investment churns and siphons wealth from the targeted Nation,  Industry begin to realise they have become uncompetitive on the global stage and panic begins to set in.

This is where the above story is coming from … our Leaders, Treasury, and Industry have all been asleep thinking a high A$ and the cheaper imports it brings was good for Australia.

This Nation is 10 years behind the global change and that is too far back to begin catch-up with policy like forcing taxpayer subsidised handouts to but domestically.

This think-tank option proves the point in the stupidity of Unions defending their workforce and wage rates.   The value of the currency turns the key and unlocks a whole load of ‘whoop-ass’ on any economy not prepared to defend itself.  With an idiot like Swan and a kiss-ass RBA head and Board full of bureaucrats promoted from within – no wonder Australia is sitting upon a powder keg about to explode from within.

As was the case in late 2008 when the A$ fell off a cliff in response to the collapse of ‘Lehman Bros‘, and ‘Bear Sterns‘. These failures in a post Beijing Olympics 2008 set up the GFC and what ultimately became the ‘sub-prime’ scandal.   See charts below – same A$ v US$ chart over 15yr, 5yr, and 1yr time frames … click on chart to enlarge n a new window – Charts provided by Incredible Charts:

15yr Chart:

5yr Chart:

1yr Chart:

The price action on the 1yr chart indicates a breakout to the upside … on the 15yr chart this indicates new highs in the next 3-6 months …

This being a Federal election year in Australia you can be sure that the Government will be tweaking the numbers for its own self-serving agenda. The above story about ‘buy Australia’ is an old and tried version of trying to fix our trade imbalance. With downside in the A$ classed as ‘low risk’ – off-shore investors already invested will only become nervous investors if the political scene becomes unstable. That might happen if Gillard and the AWU scandal takes off given the Victorian and WA police investigations working in tandem and a steady flow of damaging evidence comes to light.

Rest assured the ALP caucus have their eyes on this story, as well as the Slipper fraud and the Thompson HSU court case.

If Tony Abbott was to do nothing he will win this election in a landslide …

The RBA have stated in the past as reported on this site they are scared to challenge other Central Banks over their buying of A$ bonds … an investment happily provided by this Labour Government with its $300 billion spend.

AN interesting research model would be to compare the performance of the top 200 publicly listed companies, with the top 50 companies, and then with the Banks, and the big miners since the heat of the GFC.

What you would find is that more concentration of Fund Management money has been placed in an ever narrowing group of Companies because the investment market does not trust the stock market anymore.

Everybody is leveraged ‘short’ or ‘neutral’ and all the risk is therefore to the upside.  A breakout of the A$ will create ‘short-covering’ and a spikes in the equity and bond markets as well.  Bond yields will again fall as a new wave of off-shore money arrives to help push the market … and then it will begin to flatline once again.

How the election interplay’s in this financial game of chess is a mind game in itself … Abbott’s win is factored in … if Gillard remains and her preferred PM numbers stay the same … the bookies odds will alter quickly and dramatically …

This is gonna be a volatile year folks … strap yourselves in and my money is on selling A$ assets on a breakout above A$1.10 v US$ looking for a long-term bubble burst in Property, Equities, and the A$ all crashing in a sharp reversal …

I’ve been here many times before over the last 25 odd years and whilst the theory and rhetoric has always been right … the Government has thwarted the best laid plans by printing more and more money – all in a vain attempt to delay the inevitable and push the Armageddon scenario on to some sucker of the future who will be left holding the poison chalice and with no musical chair left to use.

The next few weeks will just be warm-up rounds for what is to follow … the heavy hits won’t start until Mar/Apr … and if Slipper resigns and takes his super, as opposed to risking being found guilty and losing it all … the by-election could trigger an early call on the election … so whilst it will be gently gently in the next few weeks on all sides … much will be happening behind the scenes.

Slipper – as unimportant and morally bankrupt as he is – still may play a very big part on what happens this year – that is where he likes to position himself and his epitaph still has many possibilities.

Hunker down folks … this is gonna be some sort of ride!!!

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The EYE-BALL Guru …

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  1. Colin N Spencer
    January 18, 2013 at 11:09 am

    Did you read Richo this morning on Gillard?

    I think you are right. The odds must favour Slipper resigning!!??

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