Jan 09
18
Is Australia the Worlds Last Bastion of Economic Stability ?
Say What !?! Did I say Economically stable – what about the
$1.40 per litre (1/4 gal) petrol price ?
What about much maligned, overworked and under funded
Healthcare system ?
For years, we believed the Accountants, Lawyers, Bank
Managers and Real Estate Salesman. Real Wealth is Bricks and Mortar on a piece
of Land.
Well the results are in. They were wrong. What can we believe
in now for our (Australia’s)
future survival.
At a time when globally governments are re-appraising the
potential of renewed tariff barriers and increased “Buy Homegrown product
campaigns to create more jobs” Australia
is sitting on the edges smirking quietly.
Australia is arguably the only country in the world
that is – or rather, could be, self sufficient.
Australia
as a nation has nothing to prove.
So what if we are under-populated ?.
So what if we cant manufacture a decent Ford Capri ?
The point is, the rest of the world is lucky that we want to
play with them.
We grow Wheat. Barley, Corn, Sugar cane and all of the other
staple food groups; we have Coal, we
have Oil, We have Diamonds, Platinum, Silver, Magnesium, Zeolite, in fact
except for a couple of elements of the Periodic table that are made in Bern and
Los Alamos; our natural resources include everything we could possibly need.
We could almost shut the borders tomorrow, disconnect our
dollar and survive.
What’s that ? Ipods – no we don’t have any Ipod Mines.
Therein lies our deficit. Consumer desires – not needs;
WANTS.
Little Johnny WANTS a new Harddisk to store his growing
movie collection.
Little Jenny needs a new car to get to Uni, she WANTS a BMW.
Little Barry, bless his heart WANTS a new Iphone with the 32
Mb SSD disk.
And what about Channel No. 5 ?
My answer to that is EBAY.
Consumers that want – can buy from Ebay.
But what will happen to our Electronic Superstores ?
Don’t need them.
But if we did shut the borders – then someone somewhere
would find a way to license Ipod manufacture in Australia.
Most electronic white-goods and computer equipment would initially
go up in price, as would channel no.5 and BMW cars.
What the public mostly doesn’t realize is that we are
already paying a 100% overhead on many of these products regardless of our open
trade policies.
The overhead is due in a large part to this country’s
reliance on the US Dollar as its trade currency.
If we started settling all our foreign debt with Euros and
insisting that all sales be recalculated into Euros, then very quickly all of
those trade goods would reduce by between 33% and 28%.
(For those slow at mathematics – that’s $100,000 discount
on the BMW 745iL Just for buying it from Germany
with Euros….)
That is the estimated overvaluation of the US dollar by the US
Federal Reserve recent issuing of self securitized (Junk) Bonds.
There are other additional advantages
Our oil would last an additional forty years (until 2075) –
if we stopped exporting it tomorrow and
our coal would last an additional 70 years.(until 2134).
AND…
We would learn how to be an industrialized nation again.
Australia
is a truly cosmopolitan country with an impressive line-up of talent.
We have, Americans, Armenians, Austrians, Basques, Chileans
and lots of other nations, all of whom are highly qualified technical people.
If we let these people work in the industry they were
trained in instead of forcing Surgeons to be Registered Nurses (Croatian),
Lawyers to be taxi drivers (Armenian) and Hydroponic Biologists to be lab
assistants (Afghanistanian), then we could accelerate our return to the
Australia that was the 50’s and 60’s.
Closing the gates for just five years would raise our dollar
to levels we have never before seen and introduce a new period of bullish economic
certainty and almost duplicate the economic growth of Japan
in the fifties.
Lets talk about our Mineral Industry again.
We mine it – thousand of tons every year.
Unfortunately, we don’t smelt it, beat it, form it, mold it
or do anything else to it (very much) except to load it all in ships and send
it overseas and say – gee that was a good year.
In economics, a business that behaves in this manner is never
given a twelve year business plan – we just draft a five year plan and suggest
they show the shareholders the three year plan.
The term is referred to as the Theory of diminishing economic
returns. To maintain the Purchase Price Parity of our dollar, as our population
grows we have to export more raw materials to achieve the same GDP balancing
act result.
Is there something wrong with our labour force.
Do we lack people that want jobs ?
No – we just have politicians that listen to their lobbyist
advisors who are on the payroll of the corporations that want the fast returns
because their Directors want the bonuses this year because by the year after
next, when they put themselves up for re-election, they may not get voted in
again.
Foreign Trade is a complicated business. Between a healthy
happy country and poverty “are only a few that prevent the rest of us
from getting so much”.
The idea of raping the resources to provide an immediate
shareholder profit is not a long term winner.
Real Wealth can never be created by reselling at a set
margin someone else’s produce.
That methodology merely intercepts and adds GST to a fiscal
opportunity.
Real wealth can only be created by manufacturing.
That lady at the markets that makes her own candles is
contributing more to the wealth of the country than any shop assistant in a
wholesale to retail arbitrage position.
Australia
should look at its own tarrif protectionism methods by considering legislating
AGAINST raw materials being exported.
We could phase the process in gradually.
As an example, Let us examine BHP exporting copper to China.
It appears to be an annually renewable contract – therefore
it would appear that we could say that;
By 2010 – 50% of all copper exports have to be in ingot
form, not raw minerals/pellets.
By 2012 – 50% of all copper export have to be in rolls of
wire or copper tubing.
By 2015- 50% in finished products and fifty percent in
ingots.
The resulting boost in energy consumption and jobs would add
an estimated 230 billion to the Australian economy by 2012.
As a sop to the consumer junkies I offer the following: China and India will continue to buy Copper from Australia to the extent of our current reserves for thirty years. This will provide 80% of chineses and indian homes with copper pipes for water and copper wire for electricity. (With our much higher currency value – we could elect to pay cash – or offset the trade with some Tax incentives payable to BHP – after all they just doubled our GDP.)
The important thing for Shareholders in Australia
to consider is this. Is your and the Directors desire to earn a higher dividend
now stuffing up the future potential dividends for our retirement and our
children.
If the answer is yes, then we’re stuffed.
Then again, the Government could mandate these things to
happen – and they will come to pass.
Labour has been historically quite adept at nationalizing business
for the good of the constituents.
Whist I am not an advocate for nationalized industry, I am
also starting to think that without legislative oversight guided by sound
economic LONG TERM advice, our industry may sell the Gold coast without us
knowing about it until its too late – claiming they did it for the benefit of the
shareholders.
Is
it time to think about community co-operatives – no, things are not that bad
yet – comrade