To read the original version of this comment in the original context at Macrobusiness.com.au click this link. (link maybe locked – but there is a free trial available).

News reports in the AFR and commentary at Macrobusiness suggest that Chinese interests have made FIRB applications to buy up some chunks of our iron ore industry in the form of FMG now that it is struggling for breath as our mining industry competes against itself on the world market.

If these reports are true they cast an interesting light on the media campaign by Twiggy in recent weeks and confirm that we need an open inquiry into Iron Ore but not because Twiggy wanted it – perhaps despite the fact that Twiggy was asking for it.

Some have suggested that Australia is being played and they are right but the truth is our leaders put on the tutu and started skipping around the stage before the orchestra sounded a note.

We are most certainly being played and have been ever since we got this crazy idea that one of our major resources could be managed by reference to ‘free market’ principles instead of the national interest.

It doesn’t really matter which mining companies we employ to dig up our dirt they are just contractors.

It doesn’t matter if they come from London, America, South Africa or even China.

What matters is how much they are allowed to dig up and export and how they pay for the right to do so.

And when you think about it in those terms the answer is straightforward. National export volume caps with the miners bidding for volumes within those caps.

As that Brazilian article I linked to last week made clear, China manages what resources it will allow into the international market all the time.

Australia has a simple choice be ‘free market’ fanatics and sell at OUR marginal cost of production or be a smart manager of its national resources and ensure that we never compete against ourselves on the world market.

Now more than ever we need a Proper Inquiry into the Iron Ore industry.

Mr Robb’s greatest folly in his TPP/FTA adventurism is the massive green light he has given all of Australia’s trade rivals to impose high tariffs on Australian industry and workers.

While he fumbles around trying to get the USA, Japanese, Chinese, Koreans and anyone else who crosses his path to let Australia sell them a few tonnes more cheese or steaks sometime next decade, he is happily giving all of them the power to impose massive new and ongoing tariffs on all of Australian Industry and every local worker.

Yes – you heard the Glass Pyramid correctly.

Mr Robb is making life even easier for our trade rivals by allowing them to place massive tariffs on Australian industry and every Australian worker.

How does it work?

Simple, if you are a trade rival of Australia (like most of our developed world allies are) and you want to give your domestic industry an advantage over Australian industry by manipulating exchange rates all you need to do is export capital to Australia.

Exporting capital means buying up lots and lots of Australian Government Bonds, IOU’s issued by Australian banks for mortgages and buying as many Australian assets as you can fit in your briefcase.

When you are allowed to do it – your exchange rates goes down and Australia’s exchange rate goes up.

Then what happens is that your exports to Australia rise and Australian exporting industries and import competing industries lose sales and eventually shut down.

If you think that sounds a bit rough – you are right, but what is worse is that as it happens you have prime fools like Continue reading →

GLASS PYRAMID ‘EXCLUSIVE’ SEALED SECTION CONTENT

Ever since the Queen of Australia found that there was competition for the abbreviation QE there has a been growing parade of phrases with “QE” bolted on.

• QE 1, QE 2 and QE 3
• QE for Wall Street
• QE for Main Street
• QE for the People
• Bankers 4 QE 4-evah!
• QE for the Asset Rich.
• etc

Never one to miss a merchandising opportunity, and with a large stock of slogan ready T-Shirts gathering dust, the Glass Pyramid is pleased to announce the imminent arrival of QE for Debtors into the meme market place.

What is QE for Debtors?

QE for Debtors is essentially a bank approved form of QE for the People which itself is being promoted as the inevitable replacement for the original versions of QE which amounted to QE for the Bankers/Wall Street/Asset Rich etc.

To understand why QE for Debtors is on the way, a quick tap dance along the QE evolutionary yellow brick road is necessary. Continue reading →

GLASS PYRAMID ‘EXCLUSIVE’ SEALED SECTION CONTENT

In the main quadrangle of the Glass Pyramid lies a fountain fed by an underground spring. As the waters seem likely to run forever it was decided by the ground keepers to call the fountain ‘Hope’.

That ground keeper “dad joke” comes to mind when considering the approach to economics by the ‘progressive’ Green Party. Surely a party that claims to be progressive will one day adopt an approach to economics that is truly progressive and not just a grab bag collection of ‘tie-dyed’ and ‘found’ policies that invariably catch smirks inside the metropolitan city limits (outside of inner-urban villages that is).

With Richard di Natale’s ascension into … the Green leadership suite there is a wonderful opportunity for the Greens to adopt an economic narrative and agenda that is not only truly progressive but will make it much more likely that their more organic “Nimbin Ready” policies will catch on outside the warp and weft collectives.

As an eager supplier of free unsolicited advice the Glass Pyramid “Gardening Club” offers the following program to the Greens.

Progressive political parties and other social justice organisations must understand that unproductive international capital flows are at the core of most of the problems they are seeking to address.

It does not matter what your ‘progressive’ social agenda entails you will get NOWHERE unless you understand how ‘unproductive’ international capital flows are the fundamental driver of most of the problems you are seeking to overcome.

Yes, mere mention of the words ‘unproductive capital flows’ is enough to make most eyes glaze over instantly but it is actually a very simple issue and after a few paragraphs the penny should start to drop.

“….Over the last few decades, our economic system evolved into the ultimate exploitation machine: Rich people in the West exploit ordinary people in the West who with their consumerist lifestyle exploit poor people in Asia/Africa and we all together exploit natural resources on this planet to the brink of existence…”     doctorX

doctorX nails the problem but what is the primary mechanism that has produced this outcome (and most importantly what is the method by which the average and generally well meaning voter in Oz, USA and other Western Countries etc agrees to a process that is undermining their future economic prosperity but also the sustained prosperity of developing countries).

It is simple – Continue reading →

To read the original version of this comment in the original context at Macrobusiness.com.au click this link. (link maybe locked – but there is a free trial available)

It is unfortunate that Twiggy is claiming to speak in the national interest because that is hardly believable.  His shareholders and bond holders did not sign up for that gig!

What is unclear is whether Twiggy’s claim that Australia has pricing power in the iron ore market is credible.

If Australia has real pricing power then it may be in the national interest to Continue reading →

To read the original version of this comment in the original context at Macrobusiness.com.au click this link. (link maybe locked – but there is a free trial available)

The RBA May interest rate meeting “game” has kicked off yet again – who has got the inside whisper! Who has been dancing with the trainer’s niece at a CWA knees up in Walgett?

Is it the long toothed sage or the new kid on the block or are they all just lucky guesses.   The NKOTB has been given short odds and certainly sounds certain so the Glass Pyramid will go with that – the RBA will cut folks!.   As discussed here and here– the path to ZIRP under the current economic model is simply a question of when not if.

It is embarrassing enough that the RBA have lost control of the economy and are now watching it rotate faster and faster as it disappears down the ZIRP / household debt / foreign debt plug hole as the “currency warfare” by our trading rivals/allies gets out of control.

We can put that down to the ideological obsessions of the economic model they have been made responsible for implementing by the pollies.

The bit that is outrageous is the lack of clear and unambiguous warnings of what is happening and any explanation of the alternatives to the current model that should at least be discussed.

There is nothing about the RBA charter or their role as public servants, especially ‘independent’ public servants, that prevents them from Continue reading →