Friday, January 18, 2008

Which Way Is Up?

After ten consecutive days of falling sharemarket prices there can be no doubt that the United States economic crisis is having an impact here. Despite all the assurances from politicians and expert commentators, the Australian market remains vulnerable to American influences.

While it is true that the Australian economy continues to be strong, and Australian companies continue to be profitable, it should always have been obvious that if King Canute cannot hold back the tide, neither can the Australian sharemarket. The real concern now is that the problems could well extend beyond the stock exchange.

While it is a great comfort to know that Australia does not have the same budget deficit problems that will haunt the United States for years to come, we cannot expect to be completely insulated from the fallout. In fact, some of our own domestic conditions are also cause for concern. For example, inflation is rising, interest rates are rising, personal debt is rising, and consumer confidence is falling. The residential property market is grossly overpriced in relation to incomes, but incomes themselves have been rising with the economy. I believe it is becoming increasingly certain that there will be a property correction, just as we are now experiencing a sharemarket correction. We have already seen it in the United States and in parts of Europe. We will see it here.

Now, don’t panic, it’s not the end of the world. But for what it’s worth, I believe now is not the time for an aggressive investment strategy.

Thursday, January 17, 2008

Protestors or Pirates?

The outlaw protest organization Sea Shepherd has achieved its aim of prompting an international diplomatic incident and the attendant publicity. But has it actually achieved anything to stop Japan’s whaling program? The boarding of the Yushin Maru has resulted in a standoff that threatens to reach ridiculous extremes. On the one hand, the Japanese are accusing the protestors of committing an act of piracy, and in return Sea Shepherd has labeled the Japanese as terrorists for taking hostages and making demands for their release.

The fact of the matter is that Benjamin Potts and Giles Lane boarded a vessel without permission. In international maritime law that falls into the category of piracy. While Sea Shepherd legitimately disputes the legality of the Japanese whaling operation, they have absolutely no authority of any kind to act on that dispute. As our parents always told us, “two wrongs don’t make a right”. Sea Shepherd operates outside the law, but expects to be taken seriously when it accuses Japan of unlawful behaviour. It is hypocritical.

It is also counter-productive. While Australian and British authorities are now tied up in diplomatic efforts to secure the return of the two protestors, the focus is shifted away from negotiations on the matter of the whaling. Where our diplomats and politicians might have been working quietly and diligently to put the pressure on Japan to change its ways, those efforts have now been redirected to dealing with the fallout of ratbag activists who have made the mistake of confusing headlines with headway.

Sea Shepherd have actually done more to hurt their cause than to help it.

Tuesday, January 15, 2008

Risky Business...

People have been asking just what should be done to teach young Corey Delaney (no relation) a lesson. Corey is the 16 year old Victorian boy who decided to have a party at his parents’ house while they were away on holiday on the Gold Coast. Rather than just phone a few friends, Corey posted an open invitation on his Myspace page and more than 500 strangers turned up. Things became ugly and the mob went on a rampage.

Police were called, rocks and bottles were thrown, cars were damaged. It is fortunate nobody was seriously injured. All of this with Mum and Dad none the wiser, enjoying their Gold Coast Holiday. Naturally, they hit the roof when they found out. Now they have returned home to sort it out and their son is avoiding them. To round it all off, the Victoria Police are now considering giving the Delaneys a $20000 bill for the damage and the drain on Police resources.

Is it fair? Are they bad parents for leaving young Corey home alone in the first place? And just what sort of punishment would be appropriate? All these questions are now getting a very public airing. In their defence, it appears that Mr. and Mrs. Delaney left Corey to stay with friends, not home alone. It seems that the teenager took it upon himself to use his parents’ house as a party venue. In fact it seems he managed to con his parents all along by pulling out of the family holiday at the last minute, claiming to have work commitments.

Despite the open invitation published on the internet, it is difficult to legally blame Corey for the violent actions of others who gate crashed the party, but most people commenting on talkback radio agree that he was a goose and should bear the responsibility. One thing is for sure, if he gets away scott free, he’ll just continue to think the whole thing was a hoot. What’s worse, party promoters are now talking about offering him a job, saying he could earn as much as $10 000 for a single party. If that’s the case it most certainly should go towards the damage bill.

Monday, January 14, 2008

When It’s Too Hard To Forgive and Forget

The man responsible for the collapse of HIH has been released from prison after three years. Many feel that Mr. Williams got off lightly, and what adds insult to injury is the knowledge that he will return to a life of comfort. The many people who depended on the services of his company continue to struggle with the impact this disaster has had on their lives.

Mr. Williams pled guilty to misleading the market. He has subsequently apologized to victims, saying upon release, “The last thing that I wanted ... was for HIH to fail. For people who have been hurt and for people who have suffered financial loss, I am very sorry”. And I expect that he is sorry. Logically, he would never have wanted the company to fail. He would never have wanted the gravy train to stop. He would never have wanted to go to jail. Clearly, he didn’t wreck the company on purpose.

That doesn’t let him off the hook, however. Ray Williams’ crime stemmed from nothing more than pure greed. While greed is noted as one of the seven deadly sins, the problem isn’t so much the greed itself, but the vulnerability to lapses in judgement that it inspires. And that’s the lesson for all corporate chiefs. When the question becomes “How can we make more money?” instead of “How can we run the best and most successful business?” a line is crossed which changes the priorities of the enterprise and those who run it. It’s the beginning of a slippery slope which leads to the sort of disaster witnessed here, and in similar cases such as One-Tel.

The victims of the collapse of HIH have every right to despise Ray Williams. But it won’t undo what has been done.