Tag: Investing

2012?$


2012 may yet turn out to be a tumultuous year, albeit for different – principally economic and financial – reasons. It’s all a bit worrying, depressing even. That’s what happens when you catch up on financial news in this climate I guess.

I have not read financial news for a while now. My current role does not require this beyond the most cursory glance at interest rate trends and general property market well being.

Just for fun however I decided to catch up on some news and it was a mistake. 2012 now feels like a harbinger of bad things, from the perspective of how the economy and finance will fare.

First there’s this swathe of industrial disputes fought out in a climate of economic uncertainty as a result of what’s happening in Europe. Collective agreements companies rushed to sign before the Fair Work Act – courtesy of Julia Gillard – kicked in after Rudd got into the Lodge, are due to expire in 2012. So apparently workers and employers are slugging it out in anticipation of new deals and the Fair Work Act is apparently more focused on processes than outcomes.

Then there’s the credit outlook. With banks exposed to the sick men of Europe seeking to make up gaping holes, borrowing – mainly the interbank sort – is going to be a lot more expensive. Bond on the other hand are seeing low yields as a result of capital leaving Europe and seeking new low risk parking lots. Apparently companies thought 2012 would see the GFC ending so heaps of corporate bonds were structured to mature then. A host of factors would combine to heap pressure on funding and make the business environment very difficult.

I wonder what 2012 would look like. It probably isn’t “The End” but it looks like it could well be messy.

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pIGs


Silvio’s peccadilloes? No one’s laughing or simply annoyed anymore. Italy‘s sovereign risk issues have triggered a Wall Street bloodbath overnight. Another plunge – this time just over 3% n the Dow and nearly 4 on the Nasdaq – means things continue to look really gloomy, even worse than the storms in Melbourne overnight. I wonder if Europe PIGS scenario can get any worse. I’m really glad I didn’t take the London option back in 2004. What will become of the economic scene, I wonder…

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Penny Wong’s Greek Gift


The report that Finance Minister Penny Wong has plans to withdraw hundreds of millions of dollars from the Future Fund is most disturbing. There appears to be no reason for such plans safe to keep intact Labor promise for a surplus budget in 2012. This appears to be wanton and reckless behaviour that tells us our worries that Labor Governments are more fiscally irresponsible are not astray.

When Peter Costello set up the fund, the understanding was that no withdrawal can be made unless actuarial advice is that the liability arising from public sector superannuation obligations would be fully funded. This advice has yet to be given in fact the current advice is that for the 2012 budget, the liability would not be funded.

So why is Penny Wong and her boss the discredited and unwanted Julia Gillard, so hell bent on this course of action? Australians should be up in arms and say to this government to stop messing with our future. First the carbon tax to wreak uncertainty on the economy, now this banditry of a raid on our future fund.

While not every one of us has a direct interest in this fund, undermining the future fund would do serious damage to the government’s sovereign financial rating which would in turn send our country down the Grecian path with similar tragic outcomes. Hands off the future fund!

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