Back on air

June 28th, 2008

My hosting service had a major hard drive failure which has kept me off air for several days. Of course that meant I couldn’t post an explanation, but I belatedly realised (thanks to a reader getting in contact there) that I could have put up an announcement on my Facebook page. Anyway I’m back on air and I’ll make up for some of the lost time with some quick points

* Joshua Gans is selling the first copy of his book Parentonomics here on eBay to raise money for a cure for MS. Go and bid – it should be a fun read

* Ken Henry is using his annual leave to help save the endangered hairy-nosed wombat, but I’m expected a new round of extinctions among the endangered species of Opposition leaders.

* After equivocating for months, the Rudd government seems finally to have bitten the bullet, saying, correctly “We’ll make petrol dearer“. Meanwhile, looking at the international news, I’ve been struck with the failure of demagogic attempts like the Liberals’ proposed cut in fuel excise. The McCain-Clinton gas tax holiday seems to have sunk without trace, the EU has held the line against protests, and lots of countries (Indonesia and China among others) are cutting existing subsidies as the futility of a cheap energy policy becomes evident

* The news from the credit crisis in the US has been more alarming than ever. The collapse of the (largely bogus) bond insurance business of firms like MBIA and Ambac has generated a new crisis in markets for associated credit default derivatives. And it turns out the the infusions of equity received by most banks late last year, which ended the first round of the credit crunch had conditions attached which make any further resort to this rescue method highly appealing (essentially, those who made the first injection have to get free shares to offset any subsequent dilution). All of this is mindnumbingly complex. But whereas the inference from complexity used to be “this is much too hard to understand, and the experts have it all under control” it’s now more like “who knows where the next time bomb is hidden>”.

Categories: Economics - General, Metablogging Tags:
  1. Peter Wood
    June 28th, 2008 at 13:25 | #1

    Good to see that you are back on air. Unfortunately your site seems have slowed right down and sometimes times out with an error message. Hopefully these issues will be sorted out soon.

  2. jquiggin
    June 28th, 2008 at 14:23 | #2

    I’m hoping that the fix to the server will also fix this problem which has been evident for a while

  3. Socrates
    June 28th, 2008 at 15:58 | #3

    Also welcome back.

    I found the reaction to the Ken Henry story odd. I was surprised by the negative comments of some politicians, beyond normal point scoring. Personally I was very pleased that one of our most important financial decision makers had compassion and a life and interests outside finance, and the good sense to take a proper holiday when he could. Others should do the same, and we might have saner people at the top.

  4. June 28th, 2008 at 19:26 | #4

    Then again the government has apparently promised that petrol will NOT be dearer (http://www.smh.com.au/news/national/petrol-price-to-be-protected/2008/06/27/1214472770817.html) … meaning either that the government’s position is every bit as confused as the Coalition’s or (more likely, IMHO) the MSM is playing its usual game of reporting rumour, speculation and conjecture as fact to stoke its own self-importance.

  5. SJ
    June 28th, 2008 at 20:17 | #5

    From Ken’s link to today’s SMH (28/06/08):

    The Government’s price commitment indicates that should fuel be included in the emissions scheme, petrol excise would be cut to offset the increase caused by the imposition of a carbon tax.

    If this is true, it’s eminently sensible, IMO. It matches a suggestion made by Malcolm Turnbull (reported by Peter Martin in the Canberra Times yesterday, but from an earlier interview on Skynews).

    Here’s Malcolm Turnbull on 24/06/08:

    For every $10 a tonne of carbon price you add about 2.5 cents a litre for the price of petrol. So if you have $100 carbon price, that’s 25 cents a litre on petrol roughly stated. Now there are a couple of ways you can deal with this. One you can what the Europeans have done and a number of other countries have done, and say we will leave liquid fuels out of the emissions trading scheme, at least at the outset. The other possibility is that you can keep the carbon price across the board, include liquid fuels, but reduce the excise as you impose the carbon price.

    Here’s me on 22/06/08:

    John said that carbon taxes of $20, $50 and $100 per ton of CO2 result in petrol taxes of about 5, 12.5 and 25 cents/litre.

    If a carbon tax is implemented, then yes, the government will collect this money. There’s no reason why they couldn’t simultaneously reduce the excise by the same amount, in which case the price to consumers of petrol would not change, but the price of other fuels, e.g. coal, would increase.

    There’s probably not much need to increase the price of petrol any further. In effect, the oil exporting nations are taxing our oil based carbon enough already. Of course, the oil importing nations would have been much better off if they’d introduced the carbon tax on oil years ago.

    The more important thing to do now is to alter the relative prices of coal/natural gas/renewable electricity.

    Reckon someone on Malcolm’s staff reads this blog? ;)

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