15 thoughts on “Monday message board

  1. The Economic Policy Institute in the USA brings us, via its 21/12/05 Policy Memorandum, news from the land of the free and the home of the broke:
    “1. Profits are up, but the wages and the incomes of average Americans are down.

    * Inflation-adjusted hourly and weekly wages are still below where they were at the start of the recovery in November 2001. Yet, productivity—the growth of the economic pie—is up by 13.5%.

    * Wage growth has been shortchanged because 35% of the growth of total income in the corporate sector has been distributed as corporate profits, far more than the 22% in previous periods.

    * Consequently, median household income (inflation-adjusted) has fallen five years in a row and was 4% lower in 2004 than in 1999, falling from $46,129 to $44,389.”

    URL is : http://www.epi.org/content.cfm/pm110

    Just thought y’all would like to know.

  2. The Australian dollar is now worth 42 milligrams of gold*. The US dollar is now worth 56 milligrams of gold. Both are well below their respective ten year averages.

    The monetary policy of both nations has them in a state of inflation (rising prices). This is obvious in spot prices like commodities where the lag between monetary error and price movement is rapid. It is not yet apparent in retail markets where the lag between monetary error and price movement is long. Unless monetary policy is adjusted this inflationary spiral will in the near future begin to work its way through to retail prices.

    We need tighter monetary policy. The RBA only tends to do this with interest rate targets. However it could achieve the same result by dirtying the float of the dollar. The RBA needs to strengthen the aussie dollar in international currency markets (against commodites like gold).

    * http://www.dgcsc.org/goldprices.htm

  3. Chris,

    Why will prices rise or
    Why should we have tighter monetary policy or
    Why should the tightening be through currency markets or
    Some other form of why?


  4. Terje,

    Chris C’s question is still unanswered. It is the only relevant question following from your ‘policy advice’.

  5. Why gold? Consider these points:-

    – Regardless of the fact that a non-fiat currency is in certain senses “better” than a fiat currency, that really only applies in equilibrium – and any single country that tried to go gold would probably face transitional problems that it couldn’t outlast, simply from being out of step (this applies to many other otherwise good policies in the presence of globalised bad policies, of course).

    – On the other hand, there is a special case: just as you can win at a crooked roulette game by making occasional small bets the other way to the less well-informed punters, so also going gold could make speculative gains when it too was done speculatively, but on that basis (against the other countries, and not on a fire and forget basis but carefully plotted). But this is a dangerous approach, and not a way to make lasting improvements.

  6. The inquiry into the Australian Wheat Board kickbacks to Saddam Hussein promises to become very entertaining.

    Recall that the bulk of the alleged breaches of UN sanctions took place before privatisation of the AWB. federal ministerial responsibility istherefore very much in play.

    Some snippets from Day 1 of the inquiry, as reported by the Australian:

    Mr Agius, Council Assisting will seek to demononstrate ‘there was a “great deal of correspondence” to suggest that AWB knew the money — $290 million over three years — was going to Iraq.’

    Former AWB Chief Executive Rogers told the inquiry that deals to pay trucking fees ‘could not have been done without Canberra’s knowledge.

    ‘He said the former manager for international sales and marketing, Mr Emons, “travelled to Canberra to discuss it (the transport fee) with DFAT officials” in 1999.

    ‘”I have a vague recollection that it was discussed by Emons with DFAT in Canberra,” Mr Rogers said.

    ‘He added that DFAT would have approved the change “before we proceeded”.’

    Which raises the important questions:

    1. What did Alexander Downer know and when did he know it?

    2. And if Alexander Downer didn’t know that his Department was involved in organising $290m in illegal kickbacks to the dictator of a rogue state, what were Australian taxpayers getting for the salary that they paid the man?

  7. In general, the benefit the public gets from paying politicians is simply that it keeps them busy where they can do less harm than if they were let out where they might make trouble. While I can see that there might be cases where they could do more harm, I don’t think that the AWB matter is one of them.

  8. Katz,

    Don’t forget 3.:

    What happened to all the right-wing commentators who were decrying the oil for food scandal as a monstrous crime against humanity when it was believed that the principal beneficiaries were from countries that opposed the invasion of Iraq?

    Why aren’t they howling for Downer’s head?

  9. Has anyone been following the falls on the Japanese stock market?

    Prices have declined 2-3% for three days running.

    So far it looks as though the falls have mainly bween due to market-specific factors – a scandal at an internet company and technical problems with the exchange’s software.

    Seoul is falling also and I’m wondering if this could turn into a broader regional or global sell-off.

  10. and just one more news article because I cannot reist this one either. Sorry if it has already been posted.

    …But Senator Joyce, who is pushing for the inquiry to be extended, insists that the issues of method and morality cannot be separated.

    “There are people walking around now who after the use of RU486 will be dead, and we won’t be able to legislate them back to life, so I think it is very important that we give this inquiry its proper airing,” he said.


    PS: IG – not me, I’ve been watching AWB’s price fall instead.

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