TOPIC : Defence matters
Kaon Li, (Begging for protection, Conversation contribution, March 11.)
Like many, you have fallen for the sophistry and spin of the JSF Program.
The F-22 has been the subject of what is known as 'Goldilocks Pricing' – look it up – all to get people to believe the JSF is somehow 'affordable'.
The F-22 would cost Australia less than the JSF is going to cost on a unit cost basis and, since the F-22 is at least three times more capable than the JSF will ever be, the overall fleet cost would be around 60 per cent that of 100 x F-35A JSFs.
To operate and maintain such a fleet of F-22s would cost around 65% the cost for a fleet of 100 x F-35A JSFs.
Cost benefit analysis is not the forte of our Department of Defence or is prescribed agency, the DMO.
Peter Goon, Head of T&E, Air Power Australia 11 Mar 2010 6:33 PM
TOPIC : Global credit crisis
Now CoCo bonds? (See The perils of fail-safe capital, March 11.)
Give me a break.
It is becoming more and more obvious that the financial sector is overloaded with deluded impractical nerds who have played far too many board games, and spent far too much time playing internet games in cyberspace. They really should have spent their time getting a university education. (Or is this in fact the problem?)
From my teenage years I can remember many a 'Leo Wanker' who would romance on about how rich they could be if only they could change 'this or that' rule or law. Are the 'Leo Wankers' now in charge?
Seems to me that the whole world financial system has been reduced to a board game (or x-box game) where every player gets a turn at changing the rules so that they get to win a prize – (that somebody else pays for).
Gilson Bick 11 Mar 2010 6:12 PM
TOPIC : Defence matters
The issue of the secure defence of Australia to 2050 transcends politics. (See Send in Bomber Beazley, March 11.)
If the F22 is the only aircraft capable of matching the Russian PAK-FA, the choice of aircraft is a simple no-brainer for the US and Australia. The F22 production line must remain open until a superior aircraft is guaranteed.
Tim Trumbull 11 Mar 2010 3:31 PM
TOPIC : Global credit crisis
Taxpayer guarantee for bank deposits should always be one of extreme last resorts. (See The perils of fail-safe capital, March 11.)
What diligent authorities mindful of 'privatising gains and socialising losses' should have done with the problem banks everywhere is close them temporarily, wipe out existing shareholder equity and recapitalise the bank with 50 per cent of all depositors' money. (New $1 shares are immediately issued on a pro-rata 1 for $1 reduction of every deposit balance) Then the government stands guarantor for the bank for a set period (say three years).
The somewhat dismayed depositors now own 'their bank' and face a choice. Cut and run by selling their new shares on the open market, or hang in for the long haul for recovery and a higher return. I've no doubt Icelanders among others would understand the logic of this and in the long run we depositors would be much more circumspect about where we deposit our hard-earned and at what risk/return.
Regulators are too inept and gutless to see the obvious in all this and simply behave as professional mourners ex post, after promoting widespread booms and busts with profligate use of the printing press in the first place. Such is life for we poor taxpayer slobs on ‘Main Street’ while the first users of all this 'free money' on Wall Street, laugh all the way to their bailouts.
Roger Sutton 11 Mar 2010 3:13 PM
TOPIC : China
I see that the Chinese economic growth will continue for the foreseeable future since the economic reform started some 30 years ago has only lifted about 300 million people out of poverty in a population of 1.2 billion. (See Is China's growth an illusion?, March 11.)
This process of reform and industrialisation will continue until the whole country is more evenly developed, and that means many more years to come.
The only thing that could upset this process is political instability and given the experience of the Mao years, the senior leaders of the country have learnt from the past and are ensuring smooth transition of power from one generation to another and that can only augur well for the future of the country.
China is a vast country with a huge population and is capable of creating its own market and demand albeit with some hiccups from time to time. The long-term economic outlook is in my view positive.
Albert Cherk 11 Mar 2010 2:56 PM
TOPIC : Oil woes
Wake up Australia.
China will buy up every energy company it can lay hands on and if it cannot get it, China will place very long term contracts. (See PetroChina's hunger for deals, March 11.)
Did you not read between the lines spoken by Martin Ferguson on Lateline last night?
He couldn't have made it clearer without actually saying it out loud and disobeying orders.
Just like the whistler blowers at the IEA.
Peak oil is here now!
Stop overseas selling of natural gas, we are going to need it in the 20 year long transition to a different energy regime, whatever it turns out to be.
Barry White 11 Mar 2010 2:48 PM
TOPIC : Australian banks
When ANZ acquired Grindlays in 1984 it became the 'Jewel in the Crown' only to flounder a few years later because of a single dispute with the Reserve Bank subsidiary in India.
(See ANZ's India push, March 11.)
The board, then led by Goode who cannot claim much practical experience of international much less Indian business, thought the best solution was to rid itself of India.
In their hurry (McFarlane was no more than a tool brought to replace Don Mercer who had resisted the sale. McFarlane himself was ex-Standard Chartered and must have known of the value of the Indian franchise to the Indian born then CEO of Standard Chartered) they sold the India unit and the rest of the Grindlays franchise for a pittance thus doing irreparable damage to the ANZ's franchise.
It was clear to Mercer and a few India hands that the system rate of growth in Asia was far more than in the so called developed world. But the board could not be persuaded. They thought the Indian risks were unmanageable as demonstrated by the dispute with the Reserve Bank subsidiary. It is interesting that the board now finds that the Asian risks are more manageable and is seeking to build an Asian net-work branch by branch. The diseconomies of scale weigh against the success of such a strategy.
Jayant Yardi 11 Mar 2010 2:02 PM
TOPIC : Australian banks
Karen writes "ANZ will be more likely to want to join in the bigger institutional deals, such as lending to major infrastructure projects.
This will allow ANZ to earn reasonable lending margins without having to take on undue credit risks." (See ANZ's India push, March 11.)
However, undue credit risk is present by definition in cross border lending. Actually, Phil Chronican could tell Mike Smith all about Westpac's adventures with infrastructure lending as regards the Sydney Cross City Tunnel-just over the border in Darlinghurst.
Last, one doesn't build a deposit base with one branch in another country – it takes a network (ask Louis Hawke of ANZ's Retail Bank).
Charles Powell 11 Mar 2010 1:57 PM
TOPIC : The Australian economy
Let's hope that Rudd, Swan and Tanner all read Business Spectator, particularly today's articles by Bill Gross and Dr Hartwich .
We are being reassured that government debt – which is really taxpayer-funded borrowings – was and is essential to ward off the worst impacts of the GFC.
But given the revelations involving the Department of Defence there is clearly no plan that involves cessation of spending, let alone slashing excessive and wasteful maladministration of the public purse.
And if you think that this is the only government department that behaves in this manner then you delude yourself. I believe every federal, state and local bureaucracy has similar cultures of waste and needs to be scrutinised thoroughly to achieve real cost efficiencies. Governments have not done this for fear of adding to unemployment. However that threat appears to have well and truly passed.
I believe a shake-out of non-essential roles is required right across the board, particularly at the middle to upper and executive levels of public sector agency management. Despite our fanciful wishes to the contrary, Australia cannot and will not remain immune from the fundamentals at play in the broader global economy. We need to get highly efficient, productive and accountable as a nation.
B B 11 Mar 2010 1:32 PM
TOPIC : China
Crazy bears perhaps, but the problem with looking at all those new shiny Chinese roads, cities and factories is that they are precisely that – new (see SCOREBOARD: Crazy bears, March 11).
It is a rear vision mirror view of the world. What matters moving forward is how much more remains to be built. It is the work yet to be done that creates future demand for resources.
Add to this the perennial problem of the fact that economic activity is the sum of day-to-day operational requirements plus capital development. Once you have built enough infrastructure to meet capacity you are left with a situation where all those who were involved in capital development are standing idle.
When will this point be reached? I have no idea. It could be that we are already there, or it could be in a century.
Brenton Thomas 11 Mar 2010 1:20 PM