I don’t have a strong view on the hoax announcement that ANZ had withdrawn its support for the Whitehaven coal project. However, I do have some thoughts on the widespread claim that “Mums and Dads” lost significant sums of money as a result of the short-lived fall in share prices that ensued.
First, the claim is undoubtedly true. By the time they have enough money to invest in, or speculate on, the share market, the great majority of Australians have children. Nathan Tinkler, for example, is a father of four. Gina Rinehart is, at least according to her kids, a spectacularly bad mother, but she’s a mother all the same. The unremarkable fact that most owners of shares have children does not entitle them to any particular sympathy.
More importantly, this was a zero sum event. For every Mum, Dad, or childless person who lost money by selling at the bottom, another gained by buying.
Finally, what kinds of Mums and Dads lost money on this event? Anyone who left their investment portfolio unchanged over the course of the day was unaffected. So, the losers fall into two groups
(a) Unsuccessful speculators, who might be better advised to spend more time with their kids and less time playing the market
(b) A few unlucky parents who shifted their long-term investments the right way (that is, out of coal) but at precisely the wrong time
As regards Mums and Dads in group (b), I offer the consolation that, while they didn’t get the timing precisely right, a decision to sell coal stocks will very probably turn out well in the long run. And, as far as investing is concerned, getting out of coal is certainly the best thing they could do for their children.
John Quiggin 
Hear hear!
Mums and Dads who invest in coal mining companies need to have a good hard look at themselves.
In (b), did you mean to say the right way at precisely the wrong time?
@Gavin R Putland
Snap! I was changing it just as you commented
Thank you Prof Quiggin, you once again confirm that you are a leading navigator in this spinning world trapped by parallel universes.
What about the ‘mums and dads’ who get the ‘Orwellian treatment’ in “a carefully concocted scheme to get rid of legal challenges to ministerial decisions approving new mining ventures, in particular coal mines and coal-seam gas projects.”
http://www.smh.com.au/opinion/politics/cuts-aim-to-put-mining-critics-out-of-business-20130110-2cixd.html#ixzz2HctUkczF
Hear Hear Professor.
I would also note that those “mums and dads” who did get the timing right have really only succeeded in passing over their exposure to loss to another party or parties who may also be mums and dads.
I should declare too that despite being a parent I have no specific concern for the interests of mums and dads and always cringe when I hear the term. My specific interest is with working people and the marginalised, many of whom will be parents but who get no extra personal concern from me on those grounds. I am however in the “it takes a village to raise a child” camp. Not all parents and not even most have dependent children of course.
Alison Parkes, who teaches accounting as well as having been the Green’s candidate for Lord Mayor of Melbourne, has noted that the actual losses were of the order of $80-300,000, rather than the $300million that has been widely quoted. That is in addition to your point that an equal amount was made as a windfall by those who bought at the bottom.
I’d assumed at the start that the hoaxer would be charged and would have to accept the punishment, but I wonder whether they will actually go ahead. Given that in court any attempt to pin a $300million loss on him will fall over, will it be too embarrassing to charge him with costing (one subgroup) of investors $80,000 when they’ve been making all this fuss about the figure being 4000 times as high?
Very well said, JQ. I’m sure many people will be put off by the “but but he hurt the ordinary MUMS AND DADS” approach, so this is very timely.
Well said John.
Carbon Pollution investing mums and dads have children. So by sinking money into speeding up Climate Armageddon, and so Economic Armageddon, where are their heads at?
Haven’t these parents discovered ethical investments, so everyone wins.
It’s unlikely that either the big institutions or small investors (so-called mums and dads) were induced to sell as a result of the hoax.
A perusal of WHC volumes indicates that sales, while up, we’re not enormous on 07-01-2013.
It is likely that most of the action was by traders, who may indeed have produced offspring, but who are more remarkable for their chosen occupation as speculators than for their fecundity.
That said, the market, like every other public institution, should protect itself better from pranksters. After all, Godwin Grech’s prank cost Malcolm Turnbull his career. The consequence was Abbott. If the losers in the WHC prank can unwind those trades, can the Libs unwind their latest spill?
sorry but I beg to differ.
The Mums and Dads and any other person would not have had to worry about this hoax if it never happened.
What he did was illegal and he should be prosecuted.
What if for some reason anyone was forced to sell when this was occurring!
The level of hatred directed at Jonathan Moylan in the right wing blogosphere is quite extraordinary, well out of proportion to what he did. The explanation, I think, is that not only is he an unkempt greenie who is campaigning against what he sees as a cause of climate change, which in itself sets right wingers off like hounds who have caught the scent of a fox, but he did it by disrupting what right wingers hold near and dear to their bosoms, the pure workings of the stock market.
Mathematically, what he’s done is ‘action to enrage right wingers’ to the power ‘action to enrage right wingers’. Little wonder they’ve gone troppo.
@Ben
Anybody with money in superannuation, which is anybody who works, will have some of that money invested in BHP Billiton and Rio Tinto, who mine a lot more coal than Whitehaven. This is worth keeping in mind if you’re going to take the high moral ground.
Nonsense nottrampis, Moylan will not be charged for two reasons. First, as per Stephen Luntz ‘s comment above, it would be a PR disaster for the ASX and the coal grubs, remember the Mclibel case? Second, as Sally Whyte in her article in Crikey points out:
“This is the third time in seven months the Australian stock market has seen share prices and trading affected by hoaxes. In July last year, David Jones stocks fell 5.4% on the back of a fake takeover bid and in October, trading in MacMahon Holdings was halted due to a bogus takeover bid.”
In neither of the previous ones charges were laid, I guess it could encourage copycats.
And as for the right honorable E Abetz’s clambering on top of his hobby horse of bashing the Greens, he would do well to remember his involvement of that other very undignified hoax.
From the Globalmail:
“First, Eric Abetz should know a thing or two about hoaxes. He was the man who first produced, in a Parliamentary estimates committee, an email — subsequently proven a forgery — which purported to show then Prime Minister Kevin Rudd had received mates’ rates on a car in return for favours to a Brisbane car dealer.
The source of the information was one Godwin Grech, a Treasury official identified by other members of the Coalition as its “mole” inside the department who channelled information to them.
Abetz was the conduit by which this libel made its way into Hansard. Which puts him rather closer to the scene of the crime than the Greens in the ANZ press release hoax.”
Amen
BTW Is coal the new asbestos?
I think it was a _spectacular_ piece of culture jamming by Jonathan Moylan who had the cojones to implement it when he plainly understood the potential consequence for himself.
Also, given that I can recall at least a couple of previous occurrences of something similar, but **done for profit**, I think we can agree that he was taking advantage of a previously exposed and obvious vulnerability in corporate-to-market communication.
Practical digital signature technology, more than 20 years old, could 99% eliminate this and all it would take is a simple ruling from ASIC to require it in “official” communications. There are already a bunch of rules dealing with this area so I can’t see that it would be huge burden on anyone involved.
JM’s main crime, I suspect, was his success with such a trivial exploit; like Mathias Rust flying to Moscow or the Chaser and their Sydney APEC prank.
Uncle Milton @13, it was amusing to read a letter in yesterday’s SMH that complained that “[Christine] Milne will lead her party to the next election having endorsed the potential of hoaxers to attempt to bring down an economic system that is based upon the transparency of asset values in a free market.” This is like accusing Milne of wanting to pull the wings off the Tooth Fairy and turn the Easter Bunny into rabbit pie.
There is a right way and a wrong way to go about an issue.
This is clearly the wrong way.
To restate, I’m not taking a view on the hoax itself, just making the point that its impact on economic welfare was tiny, and that the overheated responses are nonsense.
A lot of traders have automatic stop loss orders in place so the fall could have shaken these out. Also anyone who is on a margin loan, warrants or other such devices would have lost out. But these are not normally the activities of your normal Mums and Dads, unless they are running a hedge fund.
I’m sure a lot of people suffering from tobacco and asbestos related cancers would have liked to have seen an action like Moylan’s in the 1960’s. We need to get out of fossil fuels.
Great post, John.
Re your last point about coal not being a great investment for the kids, as it turns out Whitehaven hasn’t exactly been a great investment for anyone over the last two years:
@Happy Heyoka
A minor quibble – according to Crikey, Jonathan Moylan said he wasn’t really aware of the possible legal consequences at the time he performed the hoax.
Brilliant post.
It’s extremely troubling to hear the ABC talking all this ‘victim’ nonsense so seriously. In fact, the media’s performance on this topic deserves examination as well.
JQ, can you try to get on to provide them some of the famous ‘balance’ I’m sure they’ll be scratching for in this?
John,
I agree on that however he still misled people.
It was the wrong way to go about it.
What is your stance on the hoax itself?
@nottrampis
Err … It’s an acceptable and plausible way. Whether with hindsight, it will prove to have been a good move from the POV of working people is as yet too early to say.
@rog
And if they are, then more fool them.
It is acceptable and plausible to lie about something merely because you think it is bad?
There is a difference between chaining yourself to something to get publicity for your cause to influence public opinion and elections and imposing your will on others.
It is about fidelity to democratic equality and the rule of law: Jonathan Moylan thinks his vote counts for more than minea and yours. Might never makes right. That is mob rule.
We resolve our differences by trying to persuade each other and elections.
That’s nonsense, Moylan’s only crime (if you can call it that) is that he is not a banker with HSBC. Had he been employed with a bank he could have committed any number of crimes with impunity (too big to fail) while being paid handsomely for his efforts.
I disagree Jim. Progressive change has come about through struggle against the powers that be, not from their largesse. Civil disobedience can produce change and help change the attitudes of the public to an issue. Moylan’s actions challenge the untrammeled rule of capital and its casino of the ‘free market’, sorry I mean stock market. Hence the vitriol from capital and lies about the impact of the loss aimed at him. The Herald Sun has an article whose headline says Hoaxer Jonathan Moylan cost Nathan Tinkler $180 million… Even on the basis of a market capitalisation ‘loss’ rather than a realised loss, it was only about $50 million and if he didn’t sell it was righted after the hoax was revealed, ie in ahort time. So his loss as a consequence of the hoax was $0. Just a little different to $180 million. His notional loss since the high price of $6.03 on 18 April 2012 on the other hand has been 43%. Many mums and dads who have invested in Whitehaven have lost similar percentage amounts. Any jail for the directors for that loss? No, that’s ‘the market,’ and it is sacrosanct isn’t it?
Stephene Luntz, you say ‘Alison Parkes, who teaches accounting as well as having been the Green’s candidate for Lord Mayor of Melbourne, has noted that the actual losses were of the order of $80-300,000, rather than the $300 million that has been widely quoted.’ Any link for this? Google doesn’t bring up anything for me.
@John Passant
I can’t see how she could possibly know this. She’d have to know who bought and sold and at what price. Maybe some of the same people sold on the way down and bought on the way up. Who knows? Not even the ASX would know. If Moylan is charged or sued, someone might forensically go through each trade, but until then, nada.
It could be that her numbers are brokerage fees. But even then she’d be guessing.
@tgs
Not my style but not a big deal either.
The same is done every day for profit, and on a much bigger scale, by the big investment banks – eg pitching stocks to their clients, while selling the same stocks. If the publicity leads people who formerly trusted the stockmarket to distrust it, that’s a good thing. (For example, I don’t think Jim Rose believes the nonsense he is pushing, but if he does, this is a good lesson on how easily the system can be, and routinely is, gamed).
To make the point even sharper, Nathan Tinkler is ripping off everyone in sight – tradies,suppliers, the ATO (that is, us), shareholders and so on, while living it up in IIRC Malaysia. The outrage over this hoax really is confected.
On the day there were more than double the transactions before trading was suspended.
There’s no wrong in what Mr Moylan has done. It may well have been pointless, though it is much too early to tell. But nobody who lost was entitled to avoid loss or to win and those who won may yet lose tomorrow. The whole thing, as the Americans say, is one big crap shoot, and Mr Moylan’s action exposed just how arbitrary the whole business is. That in itself may be a sufficient warrant for what he did.
It is ironic that the enthusiasts for capitalism appeal against dishonesty, when capitalism on a global scale is a system designed to swindle the bulk of the world’s people as a matter of course and forever. The charge is led by newspapers under the instructions of the most dangerous criminal mastermind in the world — a man who has tainted governments and mobilised armies from three continents to do his bidding — and is even this day smiling as drones blessed by him slaughter innocents in at least four countries.
Even at the micro-level, Whitehaven were lying about the community benefits of the project and covering up the fact that they were pitching for government subsidies of about $23k per job. These are part of a cohort that brought down a Prime Minister of this country to avoid paying their fair share of tax.
No, Mr Moylan is not the criminal here. Not even a bit.
I’ve made this point on another thread, but Moylan’s action has brought about a greater level of public awareness of the reality of big bank involvement in fossil fuels behind their greenwashing facade than had been achieved by legal means (e.g. Guy Pearse writing an excellent book, Greenwash, which has attracted much less interest from the media than tripe like 50 Shades of Grey).
Wow,
thinking here is becoming catallaxyix!
It is perfectly okay to lie about something, possibly meaning people lose money on a bogus claim but there is nothing wrong with what moylan did.
I side with Jim Rose
@nottrampis
How embarrassment! {/Effie}
At the risk of being called on a Godwin, would the world have been a better place if Oskar Schindler had been scrupulously honest and truthful in all his dealings with the German authorities.
@Bring back Birdy at Catallaxy
Apparently his factories were very poorly run, costing the German taxpayers far more than they should have. What can one say of such a man?
And why didn’t Oscar simply come out and say frankly to the Nazis that he disapproved of the way they were treating the Jews? Oscar didn’t give the Nazis an opportunity to examine themselves and to change their ways.
Instead, cynically, Oscar played an expensive hoax on the Nazis.
@John Passant Civil disobedience and political activism are overrated.
Most activists take to the streets because if they ran openly for office, they would struggle to get 1% of the vote. Their best options are entryism and branch stacking.
The strength of democracy is a small group of concerned and thoughtful citizens can band together and change things by running for office and winning elections.
That is how new parties such as the ALP, the country party, the old DLP, Australian democrats and the greens changed Australia. One nation even had its 15 minutes of fame. Bob Katter’s party and the new DLP are next! All started in someone’s living room.
The Progressive Left finds democracy frustrating because it cannot win openly at the ballot box even under proportional representation in federal and state upper houses. the state upper houses even have Christian and shooters parties and many independents.
When the shooters party and no aircraft noise party can win ahead of you, it is time to accept that your message of struggle simply does not resonate with the electorate. There was only one left-wing government in Australia for three years after 1949.
p.s.
1. As for say the US civil rights movement as a change a catalyst, that was about shifting allegiances as more Southerns joined the middle class and voted Republican – a trend dating from the 1920s. Eisenhower carried much of the South. LBJ was put on JFK’s ticket to win back Texas. The democrats played both sides of the fence and kept courting the Dixiecrat vote, which was working class, until it died out.
2. the antiwar movement in the US in the 60s died off when the draft was repealed.
And let’s not forget John Brown. Instead of attempting to persuade Southern voters to abolish slavery peacefully and voluntarily, he fomented a slave uprising. This was no hoax or prank. It was the real thing. Fortunately, the ASIC of his day caught up with Brown and he was hanged.
Yet, shockingly, a hymn honouring this destroyer of the wealth of slave-owning mums and dads of the South is still sung in Christian churches worldwide.
Do these Christians have no respect at all for the rights of property and for an orderly market in working capital?
Jim Rose @45, that’s too simple. It’s 30 years ago this year that civil disobedience and political activism, combined with an astute electoral intervention, helped to bring about a change in Federal government in Australia, prevent the construction of the Gordon-Below-Franklin Dam, preserve one of the most valuable World Heritage properties in the world, redefine Australian federalism and contribute to the emergence of a significant new political party. The effects of this development are still being felt.
Jim, I don’t usually bother with your stuff but this “the antiwar movement in the US in the 60s died off when the draft was repealed.” appears to be missing the phrase “in 1973, after the US withdrew from Vietnam” Would you like me to fix it for you?
Jim, the ALP was formed as a consequence of the defeat of unions and direct action during the 1890s Depression. It was not some Kumbaya happy clapping let’s all get together and change other people’s minds type of thing. In fact,as the destruction of Rudd as PM shows, real power exists disproportionately with capital, and it is only industrial action or mass social protests than can challenge its entrenched power. Parliament doesn’t. Indeed it is its spokesperson, with minor differences.
In support of John P @49 I offer Julie Novak at Catallaxy, who Jim Rose must surely consider a reliable authority who writes, with characteristic moderation and equanimity:
“That a rabid self?interest group, in the guise of trade unions, had crafted the Australian Labor Party to infiltrate legislatures, and subvert democratic principles in carrying out the unionists’ bidding, is of great historical shame and discredit to Australia, in my personal view.”
http://catallaxyfiles.com/2013/01/11/of-labor-its-heroes-and-its-legacies/