http://www.theage.com.au/world/old-values-will-help-us-survive-a-new-global-age-20081018-53n0.html?page=-1

Old values will help us survive a new global age

·         Gordon Brown

·         October 19, 2008

We must act to uphold fairness, stewardship and co-operation in dealing with the credit crisis, writes British PM Gordon Brown.

LIKE most of you, I have come from a family that values hard work and that brought me up to take responsibility and appreciate the importance of enterprise. For generations my father's family worked the land as farmers and many Browns still do. So it's hardly surprising that I believe in markets, competition and rewarding creativity and effort.

I admire the market's ability to release the dynamism and enterprise of people and so my Labour Government is pro-business and pro-markets and always will be.

But I also know that we do not live by markets alone. I have long understood that markets rely on values that they cannot generate themselves. Values as important as treating people fairly, acting responsibly, co-operating for the benefit of all. And these values that our economy and society need in order to flourish are not born in markets, nor in states.

These values - fairness, stewardship, co-operation - are learned in families, neighbourhoods and communities and developed in the relationships we enjoy as a society.

The first financial crisis of the global age has now laid bare the weaknesses of unbridled free markets. In the past few weeks trust, the most precious asset of financial institutions, has been eroded.

Families whose only speculation is buying a lottery ticket or a premium bond or a few shares rightly feel they are being unfairly endangered by storms they had no hand in creating. And what's happening around the world is raising fundamental questions for the new global age about the right relationships between markets and governments.

In this unique period of global change we are in uncharted waters. But we do have a compass by which to navigate. And while action is being taken to rectify the financial weaknesses of our banks and institutions, we must now also act decisively to uphold and apply the fundamental values which can shape a stronger economy and fair society of the future. This is not something that can be guaranteed by more and more intrusive regulation - it is about upholding three key ethics in public policy and across the public arena.

Markets work best when underpinned by an ethic of fairness. The institutions of the marketplace need to be founded on the ethic of stewardship. And this new interdependent global economy cannot work for the world's people without an ethic of co-operation.

Firstly, the ethic of fairness means we reward hard work, thrift, enterprise, effort and responsible risk-taking, but refuse to condone or reward irresponsible or excessive risk-taking. We celebrate those who profit from creativity and hard work but not those who make reckless gambles with other people's money. That's why, for example, a new Financial Services Authority code of conduct will make long-term success the basis for bonuses in the future.

Fairness means that in these tougher and difficult times where there is a risk of hard-working families being hit by unemployment originating in global forces well beyond our shores, we have a duty to act with urgency. So we are extending our new deal for jobs. Where there is a threat to enterprising small businesses - the lifeblood of our national prosperity - we must be there to help with new support in accessing credit. Where people make the effort to save for a home, we must do what we can to assist by getting the housing market moving again.

Secondly, the ethic of stewardship must restore to all financial institutions their public purpose. Boards need to proceed on the basis the best companies do already: that when people start a new business or save for a wedding or Christmas they are investing not just their cash in the bank but also their hopes and dreams. Quite simply: banks are unique because they are stewards of the people's money. That's why we have acted not just to stabilise the banking system, but to ensure that financing is passed on to small businesses and families who want to get on with ordinary life in these extraordinary times: banks doing what banks were built to do and the best banks have always done.

We are also finding that in an interdependent global economy the ethic of co-operation matters more than ever. We are in this together. Risk has been globalised, but the responsibilities to act when problems arise have not been. In the 1940s, visionaries took on the challenges of the day and built international institutions that have lasted for 60 years. But they were designed for an era of sheltered markets and national competition. Now we must build global institutions for an era of global markets and global competition. I have set out my proposals for a new global early warning system, for cross-border supervision for action to eliminate the conflicts of interest that have dragged our world economy down, and for fundamental reform of international institutions.

The smallness of political debate has all too often obscured the scale of these huge global challenges that we must address together in a united way as one country.

This is not just any time - not the time for politics or economics as usual. It is a defining moment for our emerging global society. And tough times test not just our institutions, but our beliefs. In this uncertain world the values of fairness, stewardship and co-operation that underpin markets at their best have come of age. These are the values that can unite the nation, will ensure we can pull together as one country - and we will come through the downturn stronger not weaker.

DAILY TELEGRAPH

 

http://www.theage.com.au/opinion/goodbye-mr-kent-20081018-53mq.html?page=-1

Goodbye, Mr Kent

·         Paul Daley

·         October 19, 2008

IT'S amazing what a rush of Franklin D. Roosevelt can do to a prime minister's brain. One minute our PM Kevin Rudd is a super-cautious, process-obsessed, review-driven control freak. Then, after a few back-of-the-envelope sums with the man formerly known as The Least Confident Treasurer The World Has Ever Seen, he's blowing $10.4 billion of a budget surplus obsessively acquired over 12 years by The Least Relevant Former Treasurer The World Has Ever Seen.

Roosevelt, the inspirational Depression-era American president, liked to keep a lid on public expectations while at the same time taking drastic measures - overhauling the domestic economy, introducing the New Deal for the unemployed, enforcing price controls and reforming the banking system. He redefined American liberalism through radical government intervention.

Last week, Rudd had no qualms about channelling part of the Roosevelt strategy of invoking extreme economic measures while simultaneously talking down public expectations - even going so far as to borrow the president's famous quote that "we cannot ballyhoo ourselves back to prosperity".

While such artful appropriation of ballyhoo at a time of crisis has just given Kim "boondoggle" Beazley yet another reason to detest Rudd, our Prime Minister has also just gone from zero to hero when it comes to the politics of grand narrative.

One minute Rudd's critics and allies alike are pasting him for boring us senseless by failing to spin a so-called political narrative. The next thing you know he's banging on so assuredly about the threat of "extreme" capitalism, the implied venality of bank execs and the evils of avarice that you've got to wonder if the Booker Prize judges accidentally overlooked this particular morality tale by this particular loner who also happens to hold an Australian (though not an Indian) passport.

Seriously though, for some time Rudd has been trying to kickstart a debate about the obscene salaries and incentive payments trousered by some of the executives of Australia's retail and commercial banks. Fair enough - it's a worthy debate. But let's not confuse it with the current global economic and banking conflagration, triggered as it was by the subprime loans crisis that, in turn, stemmed from the genuinely immoral practices of some American lending institutions.

No. Compared to the odious banking practices in the under-regulated United States, where executive greed and apparent corporate malfeasance has undermined the financial viability of some institutions, all the Australian banks seem close to virtuous.

By all means let's try to lop a million or 10 off some bank chiefs' packages, but let us not confuse their pay with the solvency of the institutions they head. Naturally these guys and girls say they'd move overseas if their Australian packages were cut. That's not likely, you'd have to say, in this market.

Never deterred by Australia's place (island, down south) and influence (not much) in global politics, Rudd now wants the G20 nations to follow his lead on the banks.

No doubt some of our bankers are cursing the heavens at the injustice of it all. For how could such a shallow morality tale be brought to them by the wealthiest prime minister Australia has ever seen, and seconded, in a spirit of genuine bipartisanship, of course, by the wealthiest Liberal leader (and a former merchant banker, no less) known to this country?

It's all part of the New Kevin-ism, which is propelled and kept on compass by the ostensible modesty, parsimony, sobriety and consideration of its gestures.

This theme of low-key piety versus bellicose consumption has, from day one, been a critical part of Rudd's personal and political story. It's only now, with the image of an economic tsunami gathering off our coast, that it has begun to resonate.

Malcolm Turnbull has little choice. The timing of all this for him, having just assumed the leadership, is appalling. He can do little but feign bipartisanship while getting his shadow ministers to take niggling potshots from the side in the hope of scoring an inside page mention or two.

Offers of bipartisanship coupled with constant claims of "but we thought of it first" seem trite in the face of the current threat. But Turnbull is absolutely right to demand the economic data upon which the $10.4 billion bailout was based. In such threatening times, taxpayers could use the added assurance that the equations used to spend their money add up.

Times such as these are truly treacherous for opposition leaders. Kim Beazley might attest to that from his experience in 2001. Tacking to victory for most of that year, the hijacked planes of September 11 and the arrival of the Tampa changed the atmospherics dramatically.

Beazley's vacillation over the Tampa, in this febrile environment, was fatal.

Britain's Tory leader, David Cameron, meanwhile, is watching his hitherto extremely bright electoral prospects evaporate as Prime Minister Gordon Brown channels Winston Churchill … and FDR.

A few weeks ago, Brown's colleagues were plotting all sorts of strategies to replace their PM. Today, having effectively nationalised three of Britain's biggest banks before moving on to redesigning the global financial architecture, Brown has transformed himself from a ditherer to a doer. Brown was a confident and assured chancellor of the exchequer (equivalent to our treasurer) before he became a largely ineffectual, indecisive prime minister.

Which brings us back to Wayne Swan, formerly known as The Least Confident Treasurer The World Has Ever Seen. Suddenly he is channelling the pre-prime ministerial Brown.

Swan is operating with increasing assuredness as he administers the Australian inoculation program.

But he could make us feel better still as he sticks the needle in by showing us the sums.

What would FDR have done?

*Last week I incorrectly said new gun laws were introduced after the Port Arthur massacre in 1997. It was 1996.

Paul Daley is The Sunday Age's national political columnist.

 

4th October 2008 marks the 7th Birthday of the International Young Professionals Foundation.

Born at the conclusion of the first International Young Professionals Summit in October 2001 on Australia’s Gold Coast, the IYPF has grown in to a strong global network of young professionals spanning 130 countries working together to create a better world for current and future generations.

To celebrate our 7th Birthday, we’ve put together 7 ‘gifts’ for you.

1. IYPS 2008 portal
http://scenta.interwise.com/etechb/Portal/IYPS

Go here to see all of the presentations, session summaries, and even live recordings from our 3rd International Young Professionals Summit, held 19-23 August 2008 in Manchester UK. Be sure to take the time to listen to the presentation by Professor Jeffrey Sachs on how young professionals can help to achieve the Millennium Development Goals

2. IYPS 2008 Declaration & Communique
http://www.iypf.org/files/iyps2008/IYPS2008_Public_Communique.pdf

The IYPS 2008 alumni present their commitments and call to action. Read it, join us, and pass it on.

3. Monthly virtual meetings
http://scenta.interwise.com/etechb/Portal/IYPS

At the IYPS 2008 portal, there are links to upcoming events to be held on Interwise. We will hold monthly meetings and all are invited. The October meeting will focus on projects and plans for engaging young professionals in the MDGs. The November meeting will be a learning opportunity as we invite someone working on the MDGs to brief us. In December, we will hold our Annual General Meeting + have another projects and planning meeting. Bookmark the portal website and come back regularly to see what is on.

4. Stand Up Against Poverty
http://www.iypf.org/?q=content/events

Join hundreds of other young professionals at more than 50 events in more than 30 countries to Stand Up Against Poverty between 17 and 19 October and demonstrate that we are ready to play our role in seeing the MDGs realised by 2015.

5. Mdgpledge.org
http://www.mdgpledge.org

Visit mdgpledge.org today and pledge to incorporate the MDGs in to your personal and professional e-mail signatures. It is a quick and easy way to raise awareness about the MDGs and start conversations with your friends and colleagues. More MDG pledges will follow.

6. Onedoes.org
http://www.onedoes.org

To create a better world for all, all we must do is what we can. Visit onedoes.org and nominate outstanding young professionals who inspire you.

7. New IYPF.ORG
http://www.iypf.org

We’ve revamped our website. It is now easier to quickly learn about IYPF and find out how to get involved.


Click through to enjoy each gift and share these gifts with your friends and colleagues.

We look forward to working with you all to mobilise and engage young professionals in achieving the Millennium Development Goals over the next 12 months.

Cameron, Greg and the IYPF team

very interesting piece here from ross gittins on mining and the growth of china and india.

it does raise some serious questions about the future structure of our economy, the models of economic development and how sustainable they are, and gives further drive to changing our tax system here - taking bads not goods i think! and using the money we are making from all of these minerals to give ourselves some serious soft and hard infrastructure for the next 100 + years ... such as education, health care, low carbon energy, radically transformed buildings and housing and urban set ups, state of the art public transport infrastructure, etc.

we can't get sucked in to allowing these minerals - which belong to the nation - to make a small number of people very rich. we need to ensure we get rents from them to fund nation building.

and let's add elimination of poverty, homelessness, and the indigenous health gap to things to be funded!

http://business.smh.com.au/everythings-coming-up-roses/20080423-27xr.html?page=1

http://news.smh.com.au/world-bank-calls-for-food-crisis-action/20080414-25xr.html

April 14, 2008 - 7:49AM

The World Bank has called for the international community to beef up its response to soaring food prices that have led to starvation and are threatening political stability in the developing world.

Many ministers gathered for the World Bank's annual spring meeting also raised concerns over the increased use of bio-fuels, which share much of the blame for the lack of food supplies, as an alternative energy source.

A joint statement by the ministers urged countries to meet a $US500 million ($A536.88 million) aid shortfall at the World Food Program to help the world's poorest regions, where hundreds of thousands are threatened with starvation.

Global food prices have jumped 83 per cent over the last three years, and World Bank President Robert Zoellick warned that the crisis had already toppled a government in Haiti and could push ever more people into poverty.

"We have to put our money where our mouth is now, so that we can put food into hungry mouths," Zoellick said. "It is as stark as that."

Many countries put the blame for the food crisis squarely on the increased production of certain bio-fuels that use food crops as an alternative energy source.

The United States, Europe and other regions have boosted their production of bio-fuels in recent years to reduce their dependence on imported oil and cut greenhouse-gas emissions that contribute to global warming.

Indian Finance Minister P Chidambaram called on industrial nations to cut off all subsidies for such bio-fuel production.

"In a world where there is hunger and poverty, there is no policy justification for diverting food crops towards bio-fuels," Chidambaram said. "Converting food into fuel is neither good policy for the poor nor for the environment."

Dominique Strauss-Kahn, head of the World Bank's sister-lender the International Monetary Fund, acknowledged the impact of bio-fuels was a serious worry for many developing countries, and said that some ministers had labelled their production a "crisis of humanity" in informal talks.

"It shows how strong this concern is," Strauss-Kahn said in a press briefing with Zoellick after the bank's Development Committee meeting.

Strauss-Kahn also warned that the food crisis threatened to derail all progress made in reducing poverty in Africa and other regions.

"All what has been done can be destroyed very rapidly" by rising food prices, he said.

Zoellick warned last week that the food crisis could set back poverty reduction in the world's poorest nations by seven years.

British Chancellor of the Exchequer Alastair Darling said that a key element of Sunday's meeting involved how to "mitigate the negative impact of high commodity prices on the poor in particular."

He called for a "fully coordinated (international) response to the market turbulence and commodity prices."

British Prime Minister Gordon Brown this week sent a letter to his Japanese counterpart urging that the food crisis be a central focus of the Group of Eight industrial nations summit in July, which will be hosted by Japan.

Hundreds of thousands of people are facing starvation, and 33 countries are threatened with social unrest, the World Bank said this week.

The World Bank on Saturday promised a 10-million-dollar grant to subsidise food in Haiti, where a week of riots led to the sacking of the government of Prime Minister Jacques Edouard Alexis.

Nigerian Finance Minister Shamsuddeen Usman called on the World Bank and international community to "urgently support" efforts to meet the food needs of the most vulnerable people, the majority of whom are in Africa.

very interesting article, though i am concerned about the clean coal stuff.

cameron

+++++

Going green for cost of a phone call
http://www.smh.com.au/news/environment/going-green-for-cost-of-a-phone-call/2008/02/14/1202760494380.html

Marian Wilkinson Environment Editor
February 15, 2008

FOR the cost of a daily local phone call, Australians could cut their greenhouse gas emissions to the same ambitious levels now being considered by the most advanced European countries, an economic study has found.

The report by the management consultants McKinsey and Company, advisers to some of the world's biggest corporations and institutions, says that by 2020 Australia could cut its greenhouse emissions to 30 per cent below 1990 levels for a cost of less than 80 cents a day for each household - or $290 per year. Over the same period household income is expected to rise by more than $20,000 per year.

The cuts could be made without a big technological breakthrough or dramatic lifestyle changes, the report finds, and by 2030, emissions could be slashed up to 60 per cent.

"This is not daydreaming. This is a fact-based analysis aimed at setting the goal posts," one of the report's authors, Stephan Gorner, told the Herald.

The report, An Australian Cost Curve for Greenhouse Gas Reduction, pre-empts the Federal Government's own studies on the cost of cutting greenhouse gases by Ross Garnaut and the Treasury. Professor Garnaut is not due to release a draft of his report until June and yesterday the Treasurer, Wayne Swan, said his department's modelling would not be available until then.

The Rudd Government has consistently refused to set its 2020 target for cutting greenhouse gases until it receives the Garnaut report. It has committed only to a 2050 target of cutting emissions by 60 per cent from 2000 levels.

The McKinsey authors have briefed the offices of the Treasurer; the Climate Change

Minister, Penny Wong; and Professor Garnaut on their report, which stresses the need for urgent action to achieve the cuts.

"Significantly reducing Australia's greenhouse gas emissions is achievable and affordable but requires rapid action", the report concludes. It notes, "The scale of changes required is substantial."

Mr Gorner, who came to McKinsey's Sydney office from Germany, rejected suggestions that the report was too optimistic but said: "You have to act now to make it happen".

"There are likely to be winners and losers," he acknowledged

The report investigates more than 100 opportunities to cut greenhouse gases across the economy, including stepping up investment in wind power, increasing regulations to slow land clearing, using tougher regulations to lift energy efficiency, speeding up new technologies through tax breaks and subsidies, lifting fuel efficiency standards, increasing the use of biofuels and increasing the use of renewable energy.

Reducing emissions in the building sector, cutting emissions from air-conditioners, hot water systems, lighting and appliances will be the most economic way of cutting emissions because the savings to the consumer will pay for the changes, the report finds.

The heavily polluting power industry will need to radically cut its emissions, which are soaring. Without any new action, Australian emissions are set to rise to 127 per cent of 1990 levels in 2020 rather than fall.

Controversially, the report assumes that clean coal technology will be commercially available for coal-fired power stations by 2030, and two-thirds of the industry will be using it. As yet there is no clean coal plant in commercial operation. The report acknowledges that, without clean coal, the cost of slashing emissions by 60 per cent by 2030 will increase by almost a third.

Alternatively, the use of renewable energy will need to increase greatly.

James Norman
The Herald Sun

January 31, 2008 12:00am

DESPITE optimism at the Bali climate change conference when Prime Minister Kevin Rudd committed Australia to the Kyoto Protocol, there are worrying signs the Government will continue to drag its feet in setting clear carbon-emission targets.

After receiving a standing ovation from the international community at Bali, Rudd disappointed many delegates by saying Australia would not sign binding emissions targets until he had received advice from climate-change adviser Ross Garnaut.

But Prof Garnaut has now made clear his preference for long-term targets over short-term goals, stating he would favor a 2050 emissions strategy over the widely accepted 2020 targets.

Worryingly, Garnaut appears to be bringing an economist's logic to what is an urgent environmental imperative for action.

Every credible piece of scientific advice we now have, including that of Australia's peak scientific body, the CSIRO, tells us climate change is accelerating faster than previously feared.

Under the Garnaut model, gases are to be reduced over 40 years rather than adhering to short-term targets.

He also supports letting the market decide how quickly to cut emissions.

"You have to ask a question about how strongly you focus on particular dates and how much you look at the overall impact over a number of years," Garnaut says.

Of course, it is important to ensure the Australian economy is able to deal with cuts in emissions in the short and long terms.

But Garnaut's model is already sounding too much like a convenient excuse to buy more time and is radically out of step with other international climate policies.

In New Zealand, for example, Prime Minister Helen Clark has received a United Nations Environmental Program award for climate change leadership because of her adopted policies, including an emissions trading scheme and to sharply reduce dependence on fossil fuels, as well as a national energy efficiency and conservation strategy.

Or compare Australia's reticence with the EU's strong target strategy and budgetary framework to meet them without damaging their economic prosperity.

Legislation has been drafted to meet the EU's commitment to reduce its overall greenhouse targets by "at least" 20 per cent by 2020.

These far-reaching measures include national targets for the expanded use of renewable energy and the compulsory purchase by companies of carbon dioxide emission permits.

These are steps Australia must be take in the short term if we are to move beyond the symbolism of Kyoto.

Prof Garnaut's long-term reduction plan will not provide the incentive for sharp emission reductions needed in the next five to 10 years if we are to avoid bleaching of the Great Barrier Reef and crippling droughts.

While it is vital to protect the economy, the inconvenient truth is that this will mean little when the the worst impacts of climate change really hit home.

James Norman is a Melbourne
journalist and author

i can't believe the stupidity and arrogance of howard, and close behind rudd. what kind of pro-growth crack are they on? surely the writing is on the wall with climate change, interest rates, inflation, etc. that we need INVESTMENT by gov't in infrastructure and GOODS (not bads) to help australian communities (and families) through the next two or three decades. fueling private debt at the expense of public assets is mindless addiction to an out of date paradigm. god. i feel like stan on southpark last night - why vote when the choices are both so effing ridiculous!?!?!?!

++++++++++

And now the $64b question: The cost?
http://www.smh.com.au/news/economy/bpeter-hartcherb/2007/11/12/1194766588764.html

Peter Hartcher
November 13, 2007

WHEN the Reserve Bank announced yesterday that it was worried about a dangerous outbreak of inflation, it must have been fervently hoping that John Howard would take the microphone and declare "me too".

Instead, the Prime Minister stood on stage in Brisbane and gave the central bank a whole new reason to fret about inflation.

He formally launched the Coalition's campaign with a record blast of new spending.

Just 2 hours after the Reserve Bank put up a giant sign saying "slow the growth", Howard appeared on a set framed by his election slogan "Go for Growth".

And go for it he did.

Howard's 2004 campaign launch is famous for his promise of $6 billion in new spending in a half-hour speech, committing taxpayers' funds at a rate of $200 million a minute.

Now Howard has set the new record, however, at $9.5 billion in 40 minutes, a rate of $237.5 million a minute. "Clearly the words from the Reserve Bank have had no impact whatsoever," observed the chief economist of the ANZ Bank, Saul Eslake.

It was a performance reminiscent of the comedian Drew Carey's line: "I may not be a very good lover, but at least I'm quick."

Howard knew he shouldn't

have - whereas last time he proudly announced the cost from the stage, yesterday he discreetly left most of the dollar amounts out of his speech.

Times have changed. Australia is in the midst of an inflationary outbreak and approaching an inflation emergency. Yet, like an addict, trying to conceal his habit yet compelled to act on it, he went ahead and promised the spending anyway.

At 11.30am, when the Reserve issued its statement that "both headline and underlying inflation are likely to exceed 3 per cent", the legal speed limit, Coalition election spending promises already stood at $55 billion for the next four years.

By the time Howard finished speaking, he had added a further $9.5 billion. So now the $64 billion question is: How high will rates have to go to tamp down the inflationary overheating that Howard is stoking in his frenetic effort to get himself re-elected?

An economist at the investment bank UBS, Scott Haslem, has calculated that three rate rises in this financial year - the last two plus the one expected in February - will depress demand in the economy by $9.1 billion.

At the same time, the tax cuts taking effect next year are expected to add about $9.7 billion. In other words, all else being equal, the Reserve Bank is effectively putting up rates to negate the effect of the tax cuts.

Howard, trusting that we are too stupid to get it, just keeps feeding this circular loop of money into the system, hoping we swoon with gratitude, not noticing that the Reserve Bank is obliged to take it all out again.

Ever-rising interest rates mean more than that, however. They attract huge sums of foreign capital chasing higher yields. That helps push up the dollar, and that, in turn, punishes exporters.

Rising rates also ratchet up the risk that the entire economy will be brought to a standstill.

Still, you have to give Howard credit for sheer chutzpah, a hide thicker than Jessie the elephant's. He interspersed his recklessness with stony-faced warnings that Labor would pose a threat to economic growth.

Labor is no better. It will spend a tad less and pronounce itself to be "more responsible". But it's unlikely to be any worse.

As Eslake says, "even if Labor only matched half the Government's numbers, they are so big that while both sides profess to be worried about interest rates, neither side is prepared to do anything meaningful about them."

(a note - one of the ... ironic things about this article is that the advertisement on the SMH website that accompanied it was for a Hummer. ha!)

from the article - full text below:

"... there are few hints of a counter-culture among today's young adults. More than half of the under-30s agree with the statement "I enjoy clothes shopping," and more than a quarter agree with the statement "I was born to shop". Almost as many would eat out every night, if they could afford it. Not surprisingly, they are much more likely than their elders to go to the cinema, eat out, go to a nightclub, buy fast food, go to a pub or even visit a music store. They like to spend their money on travel and technology, particularly mobile phones, which will come as no surprise to anyone, especially the phone companies, which are making lots of money out of them. The Morgan research finds that 91 per cent of the under-30s have mobile phones (perhaps the more surprising finding is that 9 per cent of them do not) and that they spend $54 a month on them, compared with $45 for 30- to 44-year-olds. They also like to buy computers, and plasma and LCD televisions. And travel."

cameron



Pain in the assets: generation Y's lost years
http://www.smh.com.au/news/federal-election-2007-news/gen-ys-lost-years/2007/11/04/1194117879837.html

November 5, 2007

Young adults are missing out on benefits enjoyed by their predecessors. Mark Coultan reports.

It's an integral part of being a parent: you make sacrifices to give your children the best chance to succeed in life. And there is an expectation that each succeeding generation will take those chances and be happier, better educated and better off.

But what if the behaviour of one generation - however inadvertent - caused a new generation to be worse off?

What if today's young adults, the so-called generation Y, were finding it tougher than their predecessors, generation X, while at the same time baby boomers grew ever richer, using their wealth to lock their children out of the housing market?

That is exactly what appears to be happening. Not only are people under 30 earning less (in relative terms) than generation Xers did when they were the same age, astronomical prices mean they are increasingly locked out of home ownership. They are in danger of becoming the renting generation.

(There is no clear definition of the label, but generation Y is vaguely used to define those born in the 1980s and '90s. Baby boomers are those born between the Second World War and 1961 (sometimes 1964) and Generation X is the period in between.)

Every week Roy Morgan Research knocks on Australians' doors and asks questions.

Apart from the well-known questions about who those surveyed would vote for, the researchers ask a host of other questions: which bank they use, how big is their mortgage, how much superannuation do they have?

They have been doing so for years, and not just in Australia. They also collect data from the United States, Britain, New Zealand and, in recent years, Indonesia. The result is a treasure-trove of information about the way Australians think and behave, both over time and in comparison with people overseas.

The researchers have now decided to bring some of this information together to provide a more accurate picture of trends over a 10-year period.

Their first report, State of the Nation, focuses on housing affordability. Right in the middle of an election campaign in which interest rates are a big issue, and with the Reserve Bank tipped to raise rates again this week, it is very timely.

The data draws a disturbing picture of Australians under 30 (which, for the purposes of this story, we will call generation Y). This generation is doing exactly what everybody says is the right thing: they are getting a good education.

More Australians than ever are gaining university degrees; up from 15 per cent 10 years ago to 23 per cent today.

But university education delays entry to the workforce, which could account for the relative drop in income that Morgan found for this age group.

While the average income of all Australians has increased by more than half in the past eight years, the income of Australians under 30 has only increased by about 40 per cent. People over 60 had the greatest rise, with an increase of more than 60 per cent, reflecting people staying longer in the workforce and the power of their investment income.

While increased education among younger people is undoubtedly a good thing, and normally considered a key to increasing income over a lifetime, Morgan speculates that there may be less of an income premium attached to higher education than previously, because the graduates are competing against each other for jobs.

It notes that while part-time and casual work has increased across all age groups, it was most pronounced among the under-30s. That makes sense for people who are still studying, but it may also reflect, says Morgan, "increased difficulty in finding stable, long-term employment."

While their income (relative to everybody else's income) has declined, at the same time house prices have skyrocketed.

Morgan finds that the value of the average mortgaged home has increase from $170,000 in 1997 to $434,000. But the value of a home owned by someone under 30 has not increased by as much as homes owned by older people, suggesting generation Y has had to settle for properties of relatively lower value to get into the market.

And while they are buying cheaper houses, they are borrowing more. Those who have stretched themselves to buy a home owe, on average, more than $200,000. Generation Xers owe $179,000 and baby boomers owe $128,000.

The equity that people own in their homes increases as they age, but the 10-year trend shows while young people own about the same proportion of their home as they did 10 years ago, older age groups have benefitted from house price inflation to gain a larger share of their homes.

Meanwhile, baby boomers continue to strengthen their grip on society, even as they age. Ten years ago those aged 45 to 59 owned about a third of the money in bank deposits, managed investments and superannuation. Today they own 42.6 per cent of those assets.

But generation X has the most debt. Thirty to 44-year-olds, who represent 27 per cent of the population, have 46.7 per cent of the credit card and loan debt.

Even here baby boomers are breaking the mould. Where once people in middle age had paid off their mortgages, these days paying off the mortgage is a reason to borrow more, for extensions, an investment property or shares.

Today almost half (49 per cent) of boomers have a home loan, while 10 years ago just over a third of people aged from 45 to 59 did. Even seniors have not kicked the debt habit, with the proportion of the over-60s who still have not paid off the mortgage almost doubling to 9 per cent.

But the story is not just about one generation using its purchasing power to elbow a younger one out of the market.

While members of generation Y have less money than their predecessors, they like to spend it. In many ways, today's young people have more in common with the baby boomers than with the generation between them.

In fact, some commentators have dubbed them the echo boomers. Perhaps living in a period of low unemployment has given them a similar outlook on life to those who grew up in the full-employment 1960s, when a job would be waiting after the obligatory overseas adventure.

But there are few hints of a counter-culture among today's young adults. More than half of the under-30s agree with the statement "I enjoy clothes shopping," and more than a quarter agree with the statement "I was born to shop". Almost as many would eat out every night, if they could afford it.

Not surprisingly, they are much more likely than their elders to go to the cinema, eat out, go to a nightclub, buy fast food, go to a pub or even visit a music store.

They like to spend their money on travel and technology, particularly mobile phones, which will come as no surprise to anyone, especially the phone companies, which are making lots of money out of them.

The Morgan research finds that 91 per cent of the under-30s have mobile phones (perhaps the more surprising finding is that 9 per cent of them do not) and that they spend $54 a month on them, compared with $45 for 30- to 44-year-olds.

They also like to buy computers, and plasma and LCD televisions. And travel.

In this respect generation Y is more like the baby boomers when they were in the bloom of their youth. In fact, today's young want to do what their parents did in the 1960s: leave the country.

i could punch rudd in the head. howard is not economically responsible and there was (and still is) an opportunity to demonstrate what good economics might really look like.

at least put some of this money aside for the massive shock that will accompany climate change adaptation!!!

& read this one too now ...

The inflation monster turns on the hand that fed it
http://www.smh.com.au/articles/2007/10/24/1192941153419.html

"But should we be feeling sorry for John Howard and Peter Costello? My response is no. This Government has been feeding inflation for years - giving its budget surpluses to consumers on the one hand and throwing caution to the wind. They have therefore no excuse to complain about the fact that this creates inflationary pressure."

Throwing more fuel on the fire
http://www.smh.com.au/news/federalelection2007news/bpeter-hartcherb/2007/10/24/1192941154799.html

Peter Hartcher
October 25, 2007

COMMENT

THE economy is an inflationary powderkeg waiting to explode. So what are our national political leaders doing? John Howard and Kevin Rudd are frantically packing in more gunpowder.

Australia is living through its fifth commodities boom since World War II. The other four all ended badly. "This commodities boom dwarfs all the others since the Korean War," says HSBC's chief economist, John Edwards.

"There is only one risk to the expansion, and it's huge - that we experience rising core inflation at a time when we have an economy at full capacity, and growth, if anything, is accelerating."

That is exactly what's happening. The lesson of history? "It really says we should be very careful and restrained," Edwards says.

Instead, Howard and Rudd are pledging to add extra fuel to the inflationary explosion. Let's be clear - they are increasing the odds this boom will end in a bust.

How dumb do they think the electorate is? Answer: pretty dumb. The leaders of both parties are talking economic responsibility while they busily pursue economic populism.

They are enticing us to the ballot box, trying to mesmerise us with a fistful of dollars, in the full knowledge that those very dollars will threaten the economy once the election has passed.

One frustration of this blatant irresponsibility is that there is a simple way the politicians can give us the tax cuts they are so desperate to press on us, and still pursue good policy.

All they need do is pay the tax cuts into our superannuation accounts. That way the money is not spent in an inflationary way in the next couple of years, but stored up and invested for the future.

It's a good way to help prepare for the ageing of the population, and it boosts national savings. But no, like trained monkeys that know only one trick, all they can do is keep doing what they've done before.

After Howard announced his plan to offer an extra $34 billion in tax cuts over the next three years, three things happened.

First, the futures market re-evaluated from 70 per cent to 85 per cent the likelihood that the Reserve Bank would have to raise interest rates over the year ahead to contain inflation.

Second, the headmaster of the global economic system, the International Monetary Fund, warned Australia to restrain spending to contain inflation.

And third, Rudd ignored both of these and went ahead and aped Howard's inflationary tax cuts. Yes, Labor did return to the surplus $200 million more than the Government plans to do over three years. This allows Labor to claim it's being more responsible. But this is 0.02 of 1 percentage point of the federal budget. It's a fig leaf of responsibility, not a laurel.

"It's pretty simple," says Macquarie Bank's interest rates expert, Rory Robertson. "There are two main arms of policy - one is seeking to limit spending power in the economy." That's the Reserve Bank raising interest rates.

"At the same time, the other is topping up spending power in the economy." That's Howard and Rudd handing more cash around.

"The Reserve Bank looks at Canberra and sees neither side of politics is using fiscal policy to help reinforce the bank's tighter monetary policy, so it has to tighten further."

The ANZ Bank's chief economist, Saul Eslake, is frustrated at the leaders' deliberate blindness: "Kevin Rudd likes to quote me, but he won't take my advice. Peter Costello quotes the IMF in praise of him, but he won't take its advice."

And that advice is clear. Eslake: "Howard and Rudd both claim to be committed Christians, so they would have heard in Sunday school the original architect of counter-cyclical fiscal policy - it was Joseph, who urged Pharaoh to store grain from the seven fat years and set it aside for the seven lean years."

Ross Gittins, who writes for the SMH, is a god. when it comes to economics. he cuts through the crap. anyway, here is his latest take in the wake of announcements by our prime minister (who wants a 5th term) that we should 'Go for Growth'!

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More to running economy than going for growth
http://www.smh.com.au/articles/2007/10/21/1192940902965.html

Ross Gittins
October 22, 2007

MONDAY COMMENT

SORRY, but I can't warm to the Liberals' Go For Growth as an inspirational, future-oriented election slogan. For one thing, it's too reminiscent of Paul Keating. For another, it's too close to the ideal of growth at any cost.

It's a slap in the face of those who believe our push for eternally higher living standards needs to be modified by acceptance of the imperative of minimising the damage economic activity does to the environment.

It's a strange slogan to be espoused by a Prime Minister newly converted to the cause of halting global warming - although the use of economic instruments such as tradable emission permits is intended, of course, to minimise the conflict between environmental protection and economic growth.

It's also a slap at those who believe that, in our pursuit of economic growth, we need to pay more attention to quality, not just quantity. That there's no point in becoming richer if you damage your relationships with family and friends in the process.

In short, Go For Growth has a terribly old-fashioned ring to it. As I say, it reminds me of Keating. That was his slogan during the boom of the late 1980s, though he added a characteristic twist, saying his policy was to "Go for growth - and hang on!"

Hang on turned out to be good advice because, before long, the economy roared off the speedway and landed us in "the recession we had to have". Deep recessions are indeed unavoidable if you're mad enough to believe in driving the economy as fast as possible at all times.

I remember it well because, at the time, I thought going for growth sounded a good idea. The subsequent recession taught me different - as has the record period of expansion we're still enjoying.

Since the running of the economy passed from the politicians to the central bankers, the underlying philosophy has shifted from Go For Growth to Slow But Steady Wins The Race.

When you think about it, the two slogans neatly encapsulate the rival mentalities of politicians and econocrats. The pollies always want to keep their foot on the floor and are reluctant to apply the brakes before it's absolutely necessary.

The inevitable consequence is what used to be called Stop/Go policies. It was the last gasp of misguided Keynesianism: in your impatience to get unemployment down you poured on the stimulus to get the economy out of recession and, while ever unemployment remained unacceptably high, you refused to contemplate any slowing.

Anyone who worried about what this process might be doing to inflation pressure was a stooge for the rich and powerful and didn't really care about the plight of the jobless.

It took macro-economists far too long to twig that the more you went at it like a bull at a gate, the sooner the engine would overheat and the sooner your sheer terror at the speed you were doing around corners would force you to jam on the brakes, leave the road and bring on the next recession.

Recessions were rarely more than seven years apart.

Eventually, however, the econocrats realised that if you cared about unemployment it was the recessions - not any less than flat-chat growth between them - that did the damage. That was when the former governor of the Reserve Bank, Ian Macfarlane, began repeating his mantra that the trick to getting unemployment down was to keep the recessions as far apart as possible.

And the way to achieve that was, paradoxically, to worry more about inflation. When macro management was handed over to the more patient, longer-sighted econocrats, they abandoned Go For Growth and substituted the goal of "sustainable" or "non-inflationary" growth.

To put it another way, they instigated a speed limit for growth, with the limit governed by the need to keep the inflation rate between 2 and 3 per cent on average over the cycle.

Aided by micro-economic reforms that have intensified the competitive pressure in markets and made the economy less inflation-prone, the inflation target has so far managed to stave off the next recession for a record interval of more than 16 years.

In that time the Reserve Bank has been through three protracted braking episodes, including the present incomplete episode. For much of that time progress in reducing unemployment was painfully slow, with surprisingly few full-time jobs being created.

From our present vantage point, however, with the official unemployment rate down to its lowest in 33 years (and broader measures of unemployment, which take account of underemployment and hidden unemployment, also at three-decade lows), it's clear that Slow But Steady does win the race.

Presumably, the point of the Go For Growth slogan is to remind people of the Government's (in truth, the Reserve Bank's) superior economic performance and put it in a forward-looking context.

Unfortunately, in John Howard's efforts to breathe life into that slogan in comments made to the Herald last week, he implied he imagined we lived in a world of perpetual spare capacity, had no idea of the existence of a non-accelerating-inflation rate of unemployment, and argued that micro reform had eliminated the business cycle.

He must have been let out without his economist minders.

Fortunately, we know that whoever wins the election, management of the macro economy will remain in the safe hands of the central bankers, who won't have a bar of the Go For Growth mentality.

Ross Gittins is the Herald's Economics Editor.

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Come on Kevin (Rudd, the alternative prime minister) - let's not mirror the government's approach here! We want quality, not quantity! a low carbon, sustainable future means restructuring our economy and getting new priorities!

hardly posting much here these days - putting everything as a note or a posted item on my facebook! ah facebook ... i live with you.

anyway, going to post some stuff now :)

hope you are all amazing.

great quote from the chief UN weapons inspector:

"I would not talk about any use of force," Dr ElBaradei, the director-general of the International Atomic Energy Agency in Vienna, said. "There are rules on how to use force, and I would hope that everybody would have gotten the lesson after the Iraq situation, where 700,000 innocent civilians have lost their lives on the suspicion that a country has nuclear weapons."

!!!!

the UN has a reputation for putting good people in this role. hello hans blix. hello the aussie guy whose name i cannot recall!

full article here:
http://www.smh.com.au/news/world/elbaradei-warns-of-drift-into-iran-war/2007/09/18/1189881511694.html?sssdmh=dm16.279738

SSUP!