Thailand Heading into a Civil War?

Red shirt protestors

The violence in Thailand shows no signs of abating and the ferocity of the violence seems to be escalating to catastrophic levels with no signs that an agreement can be reached between the Abhisit government and the “red shirt” protestors loyal to ousted former premier Thaksin Shinawatra. While the government has set the end of the year to hold elections, the protestors have demanded that elections be held immediately. So far scores of people have died in the violence, 25 alone on the 10 April, what many are describing as the darkest day in Thailand’s history.

For those who do not know, the background of this read my article from last year: http://damien-crankyramblings.blogspot.com/2009/04/when-will-thailand-grow-up.html

In short there is a political impasse in Thailand where the “yellow shirts” aligned with the current government and backed by the political and social elites of Bangkok are pitted against the “red shirts” who are made up of the rural poor from mostly the northern regions of Thailand and aligned with the former billionaire prime minister Thaksin Shinawatra.

The political temperature started to climb when many of those “educated” from certain sections of the community accused Thaksin of corruption and of amassing great wealth for his family. They tried to oust him using all means, including the army, courts and via the media and succeeded only for him to be replaced by other members of his TRT party. The “yellow shirts” didn’t like these replacements either and put considerable pressure on them to resign and once again succeeded.

The courts subsequently found Thaksin and his wife guilty of corruption and describing himself as a political casualty, Thaksin decided to flee the country to avoid prosecution. The “yellow shirts” plan to create political change while neutralising Thaksin’s influence succeeded with the help of the courts, military and some say by other “very important” people. With the main leaders of the TRT either charged in court or in exile the “yellow shirts” formed a new government with the help of other parties with a very loose coalition but a majority nonetheless.

The tables have now turned and the “red shirts” are getting disenchanted by Abhisit and his government as the promised date to hold elections never materialised. They have now given the government the ultimatum to hold elections immediately or face the consequence of more demonstrations.

There are a few things to note here:

Firstly, the king can put an end to this violence by mediating and giving his guidance which is revered among Thais. He’s done it successfully in the past and he can do it again. He has however, chosen not to do citing his poor health and his hope that Thailand’s fragile democracy and immature politics can one day stand on it’s own two feet.

Secondly, the “yellow shirts” who are under the political party of PAD which stands for People’s Action for Democracy by their actions do not really understand democracy due to the fact that they want greater voting rights for the “more educated” and less weighting on the votes of the rural poor, who in general voted for Thaksin in the last election. More over, they came to power using any which means except democratically, via the ballot box. They tried political pressure and when that didn’t work they tried the military and when that did not get the desired effect they tried demonstrations and when that didn’t work, they tried the courts.

Thirdly the recent violence in Thailand cannot be attributed solely to the “red shirts” as it takes two to tango. Recent reports have indicated the military have been given the go ahead to use live bullets on the protestors. Many have compared the casualties in this round of demonstrations to that held by the “yellow shirts” in 2008 and have labelled the “red shirts” extreme terrorist by virtue of the fact that so many have died this time round compared to last. As I said, it takes two to tango. Previously, the “yellow shirts” were given the red carpet by the military to march to the airport to hold it hostage and we all know what happed after that. Thailand’s economy came to a standstill. It was a case of the military and the “yellow shirts” being aligned with one another which explains, even with similar fierce demonstrations held by the PAD in 2008, not many casualties were reported. After three weeks of seizing the airport and shutting Thailand for business causing the country to lose billions of baht, not ONE protestor or its leaders have been help accountable by the police or the government. This time round, we hear of the heavy handedness of the army and the possible use of live ammunition against the demonstrators whom the government has labelled as ‘terrorists’.

Abhisit (above pic) and Thaksin (below pic)

It’s going to be interesting to see how this will be resolved but I would imagine elections being held as soon as possible, free and fair votes where a poor farmer’s vote carries the same weighting as an elite Bangkok businessman and some give and take between the two sides.

Under the Thaksin government, the fate of the rural poor improved. The free health care, subsidised lunches for school kids, subsidised utility bills for the poor, improved infrastructures in villages, fast track issuing of land titles and minimum prices set for agriculture like rice and rubber are just some of the improvements in the lives of the rural poor under the Thaksin government. If the Abhisit government want to be the legitimate government, then it must hold free and fair elections immediately and win it. It has to be able to convince the majority of the voters that it is the best government for the people, poor as well as the elite. It cannot accuse Thaksin of having been in power only because of the rural votes. It has to do something to win the hearts and minds of the rural poor as well and earn their votes and not just by alienating them by accusing them as “less educated”. The majority speaks loudest and that’s what a true democracy is. Thailand has to grow up and realise that and not take the course it's taking right now, otherwise a civil war is not out of the question.

Australia's Broadband Internet Connection - What a Joke

What we have is a fully developed rich country on the verge of a commodities boom but unable to provide it's people basic internet connection. Yes I'm talking about Australia and not Thailand or Cambodia because that's how bad it goes to be able to find a country whose internet provisions are as bad as Australia's.

I've just moved in to a new house so one of the things to do is to get a phone line and internet connection. Firstly you have to read and decipher the various internet and phone plans different providers have on offer and decide which ones suits your needs best and then you have to call them up and wait 30 minutes to speak with one of their representatives. One provider took 10 days just to tell me that Naked DSL was not available in my area! Ten days just to tell me that?

Then I went on to call another service provider who told me that they were not sure if my area was "serviceble" and would call me back after checking with their technical department. They never did call me back. I then proceeded to call another service provider who could not confirm if the fast internet was available or not but we needed to wait about 15 working days to find out! At this point I figured this was getting out of hand and the joke was on me but had to remind myself that some of these internet service providers I was calling were the premier service providers in the country and it was not that my house was located in the middle of the desert or something like that.

I figured I'd give it one last chance and proceeded to call the second largest ISP in Australia. They in turn told me that it seems that the line in my house seem to be connected and there was nothing they could do to override the line. I had to call the line providers to get them to disconnect the line. I then proceeded to call Telstra the largest telco in Australia and they told me they could not disconnect the line to MY HOUSE because of "legal reasons". I was gobsmacked and at this point was ready to send an email to Australia's communications minister to complain. I thought better of that and proceeded to ask the Telstra rep where this left me if the owner did not cancel the line? She effectively told me "you're in the shits then".

I then proceeded to call back the ISP who told me about the connected line and queried if this information he gave me was correct. After some checking and talking with his "boss" I was told that the information he gave about the existing Telstra line was not absolutely accurate and that was an obstacle they could overcome however, a new obstacle cropped up and that it was the fast broadband was not available and only wireless was available! At this point in time I was ready to cry.

He then proceeded to put me on hold again to talk to his "boss" and like magic, the fast internet magically was available again. I proceeded to sign up and we'll see after 10 waorking days if my quest for internet comes to fruition or was just an exercise in futility.

Could you imagine, I was not looking for a heart transplant donor, or doing eye surgery or applying for exclusive share placements. All I wanted was the freaking basic internet connection and I've had to call no less than six ISPs and all of them stuffed me around to my wits end. Some could not provide internet to my area, some did not call me back, some could only provide the slower speeds and almost none of them could provide any accurate information as to the availability of the fast internet connection to my area. As I said I don't live in the desert or the jungles, in fact the school is just 50 metres from my house, so for the life of me can't understand why the infrastructure is not in place to get fast speed internet.

Previously I had used a mobile broadband (wireless) service with two different service providers. The reliability of the connection was terrible and I thought that it was just my area, but having spoken to others who have had similar experiences even with other service providers, I found out I was not unique in this farcical experience. You could imagine having a straight flush in an online internet poker game where money was on the table and not being able to go all in because your internet connection was struggling to get back online. So the computer would automatically fold on your behalf if it didn't receive a response in the stipulated time set. I tried running to re-cycle the power to the modem etc. but it was bordering on ridiculous and gave up altogether. I almost smashed the computer after that experience. Imagine folding on a straight flush!! Can you imagine using online banking and in the middle of a $1 million (I'm just boasting here) international telegraphic transfer the internet line went dead and you could not tell whether the transaction went through or not. Well I could and it happened to me before and I'm not alone on this.

When I say "fast speed" don't get fooled in thinking 50Mbps like Singapore and Korea. I'm only talking fast speed with reference to Australia, which is 20Mbps. Many people in the country areas don't even have internet at all and some are still using dial up. In fact the ISPs are still selling dial up like hot cakes as it seems that that's the most reliable type of internet connection available in Australia. It's nothing less than a joke, that a country whose GPD per capita is in the high $30ks cannot provide basic and high speed broadband connection to its people.

Why 1.7 Million Landlords Could be Wrong

30 March 2010
By Kris Sayce


Last week I wrote to you explaining how the world had turned topsy-turvy. How - thanks to easy credit and money-creating banks - the idea of working for reward had been replaced with the idea that you can have your reward now, and then work later to pay it off.

At other times we've argued that housing is not a productive item, that it's simply a very expensive consumer item.

Sure, it may be used multiple times but it is still a consumer item. It's just that it's 'consumed' over a very long time frame. The fact is, a house doesn't produce anything, all it does is provide a dwelling and shelter.

Proof of that is in the size of houses. As we've pointed out before, a 50 square house that provides a dwelling for one person isn't more productive than a 15 square house that provides a dwelling for one person.

In fact, it's less productive as it has drawn resources away from other areas of the economy.

But somehow, in the weird and whacky world of the Lifestyle channel, and the equally whacky world of what can only be called 'Lifestyle Channel' Economists, housing has taken on the guise of a productive good.

It has morphed from a consumer item into an item that is now seen as the lifeblood of an economy. Housing has been changed from being considered as a dwelling or as shelter, to becoming the fountain of wealth.

If you believe the 'Lifestyle Channel' economists, housing is the ultimate barometer of the health of any developed nation.

But what we ask is, how can this be true?

The fact is it can't be true and it isn't true. Let me explain in a way that should dispel the myth of productive housing once and for all.

Let's imagine a village of 10 people (a butcher, a baker, a shoemaker, a tailor, a barber, a builder, a doctor, a farmer, a cook, and a carpenter). Each of whom owns their own home. Each home is worth the same - $100.

All of these people earn an income from making and/or selling consumable items or from providing a service to other people.

Now we've set the scene, consider this. The carpenter offers to buy the shoemaker's house for $110.

The shoemaker has just made a $10 gain on his house. How easy was that? What's to stop him from making more money from real estate? In fact, he finds out the carpenter is in the market to buy more houses and is prepared to pay up to $120 for each house.

The shoemaker spots the opportunity to make a quick buck. Knowing this, he offers to buy the butcher's house for $105, which the butcher accepts. The shoemaker then offers to sell the house to the carpenter for $120.

The shoemaker is ecstatic, how easy is this? Cobblers to the cobbling, the shoemaker can make easy money simply buying a house from one person and selling it to someone else.

And it doesn't stop there, on he goes to the tailor and offers to pay him $105 for his house. Then quick as a flash he's off round to the carpenter's to collect the $120 from selling the house to him.

That's another $15 in profits, simply from buying and selling houses. In fact, the shoemaker is so happy with his new venture that he decides to completely pack in the shoemaking game and take up property investing instead.

Anyway, we could carry on with this example forever. But let's finish it there. We'll finish it on a happy note. Everyone seems happy, there is a boom in property prices, and no one has been harmed.

But here's the point. Take a look at the scenario above again. It's a very simplified version of what happens in any property market. If housing is as productive as we are led to believe, exactly where in the example has anything of any value been added to the economy?

To be honest, we can't see it. That's because there's no productivity from buying and selling houses. There's no more productivity in buying and selling houses than there is buying and selling shares.

Look, I'm not saying that everything that happens in an economy must be productive. It'd be a pretty boring life if that was the single driver behind every action. But what I am saying is that if something isn't productive it's pointless - and potentially dangerous - to pretend it is.

The buying and selling of things doesn't necessarily create productivity. Buying and selling shifts capital and goods. It doesn't automatically produce anything.

Making a pair of shoes is productive, or slaughtering animals for meat is productive. The shoemaker selling his house to the carpenter is not productive. It doesn't add anything to the economy that wasn't already there.

Sure, at this stage the buyer and seller of the property are both satisfied. The seller is happy with the price he's received, and the buyer is happy with the price he's paid.

However, as our example shows, the buying and selling of houses has actually had a negative impact on the economy because the shoemaker has packed in shoemaking. The town will now have to import shoes from another town - which isn't necessarily bad, but what can our town export in return? Not houses.

The shoemaker is now gambling on someone being prepared to pay a higher price for houses in the town. If they stop doing that, what happens?

So, not only is housing unproductive but it simultaneously takes resources away from elsewhere in the economy. Rather than the shoemaker investing in leather and shoehorns, he's using all his capital and resources on buying houses and selling them to someone else.

That harms the leather manufacturer and also the shoe buyer as there is no one in the town to take the leather and turn it into shoes.

The lure of making money from houses has taken money and resources away from the manufacturing industry and other industries and instead invested it in housing.

And that's exactly what Australia's banks have caught on to. You can see it in their lending numbers. They've tapped into the idea that property prices always go up and are therefore helping to pump up the property bubble.

They've seen the soaring house prices over the last thirty years and are now determined to keep the market going. As far as they're concerned there's less risk in housing because they know what the attitudes of consumers are towards it.

But make no mistake, contrary to popular belief, that doesn't mean a bubble won't pop.

As the example above shows, the ability to make money from the buying and selling of houses is all based on the willingness of someone else paying a higher price - the Great Fool Theory we believe it's called. Without that the profits disappear.

Look, don't take my word for it, think about it for yourself. Think over the numbers. How does the buying and selling of a house contribute anything to an economy? I'll have something else to say on that in a moment.

But let's leave our fictional town and return to reality. Last Thursday's Australian Financial Review and The Weekend Australian Financial Review laid bare the desperate story behind property investing, and the confirmation of what we've said all along, that property investors invest solely in the belief that house prices always rise.

We were scorned by some investors who claimed that wasn't true, that income generation was a big part of it. Well, let's take a look at some of the numbers...

According to last Thursday's paper, there are 1,705,683 landlords in Australia. That's roughly 7% of the entire population. But here's the amazing thing, of those 1.7 million landlords 69.4% of them are making a loss based on the income received versus outgoing expenses.

That doesn't surprise us. We've pointed out before that rental properties are a money pit. More money goes in than comes out. And with average rental yields in Melbourne under 4%, it doesn't take a Doctorate from the Université Paris Sorbonne to work out that your costs will exceed your income.

The Weekend AFR, lays out the details. Based on the numbers, $22.9 billion of rent is received each year by landlords, yet total outgoings come in at $31.2 billion, creating a loss of $8.3 billion.

Call us mad if you will, but we're yet to find anywhere in our investing textbooks where it says making a loss from your investments is a good idea.

Now, we're assuming that property investors aren't dumb. They must be taking the hit on the income for a reason. And the simple reason is that they believe the price of housing will continue to rise, and that the rise in the price of the property will more than offset the loss from the income.

Therefore reader, it's unarguable that the primary reason that property investors invest in property is for capital gains rather than income. There's no denying it. In which case, prices have to keep increasing in order for the investors to make any money.

And there's the problem. As we know from every other asset class in Australia and around the world, it's just not possible for the price of an asset to continually rise without a major correction.

Take it from me, whatever excuses the property spruikers come up with, the Australian property market isn't immune from this outcome.

As you can see from our make-believe economy, resources have been skewed towards one area, the buying and selling of houses. All other industries are potentially suffering as no one wants to invest in those industries.

As we say, it's exactly what the Australian banks are doing, investing in houses and mortgages at the expense of other productive sectors of the economy.

But I wanted to mention one other thing. Referring back to the risk/reward attitude, housing is a perfect example of the cart being put before the horse. If you're like me, and you see housing as a consumer item then it makes sense you only buy the consumer item as a reward for your productivity.

It's should be the same with housing.

However, thanks to leverage and the ingrained impression that house prices always go up, housing has changed from being a 'reward' for productivity to being treated as the source of productivity - it is of course, nothing of the sort.

It's not helped by all the ridiculous stories about buying a home being the "Australian dream", and "rent money is dead money", etc...

But this attitude explains why housing is now seen as a leading indicator. How many times over the past year or so have you heard economists looking for positive signs from housing? Almost every month from what we can recall.

There's a simple reason for that. And it's exactly what happens with every asset bubble. Buyers overestimate future price rises and scramble to get in early. You saw it with the dot-com boom, and you're seeing it with the housing boom - "buy now before it's too late."

The overestimation leads to anticipatory buying. Only, not everyone can afford to pay up in advance to get onboard so they have to borrow in order to get a piece of the action. This pushes prices up further and necessitates further borrowing.

Again, does that sound familiar?

In reality and absent price and market manipulation, housing should lag the economy not lead it. Housing is the reward paid for by the productivity of the economy, it's not the driver of the economy itself.

The idea that the housing market can lead an economy out of recession, or to grow the economy is false. Housing is a consumable item. When it is bought or built it is consumed at that point. It provides no further benefit to the economy.

To claim it does is false.

If anything, a positive housing market indicates one of two things. Either people are rewarding themselves for their past productivity, or they are anticipating future productivity and price rises by buying houses now.

The trouble is, if the economy is skewed towards the buying and selling of houses, guess what? There won't be the necessary future productivity to pay off today's anticipatory buying of houses.

With all the credit and investment going into the housing market today, you have to wonder about the future state of the lopsided Australian economy. The simple fact is, buying houses today in the hope that others will pay a higher price for them in the future, isn't the recipe for a sustainable and healthy economy.

Rather, it's the recipe for a boom that is set to bust.

Cheers,
Kris.

Cheap Properties for Sale. Talk to your Bank Manager NOW!!!

For those of you who don't already know I've purchased a new home and in the process of selling my old home. The funny bit is my new home is actually old and my old home is actually quite new. That may be confusing but what is not confusing and definitely nothing to joke about is that buying, selling and maintaining property in Australia is not for the faint hearted. I can't explain the details (because I haven't worked them out) but I've come out of every property deal worse off than when I went in. With the barage of taxes, fees and costs of renovations, moving etc. it's no wonder it's hard to get ahead in the property game. Add to that, everytime the Reserve Bank Governor willy nilly decides to raise interest rates as a mortgage holder and now a double mortgage holder I'm hit with hundreds of dollars out of pocket just because the RBA governor decides that inflation is at "uncomfortable levels". The irony is that to curb inflation which the last time I checked was defined as rising prices we have a mechanism that we have to pay more to borrow money. So in order to curb rising prices, we have to pay higher prices. Go figure!

Anyway I thought I'd write today as I've been missing for awhile being busy with work and home moving. For those who care to know, the move was tiring but all went well and we've settled in well into the new (old) house with plenty of swimming and playing. Anyway, today's entry would be a short one and despite my experience with property, I wanted to share with you some good property bargains that I found, so call your bank manager today and make an offer!!!! Check out the links below:


http://www.homes.com/listing/104290856/5924_Maryland_St_DETROIT_MI_48224

http://www.homes.com/listing/101858255/5122_Iroquois_St_DETROIT_MI_48213

http://www.homes.com/listing/101705175/16135_Fielding_DETROIT_MI_48219

http://www.homes.com/listing/105849934/16211_Kentucky_DETROIT_MI_48221

This is the only way to be a multi-property owner if you ask me.

Cheerio and hope you find a bargain.

The Failed "Pink Bats" Scheme - See I Bag the Government Too!

Ok ok, I know what many would say about my postings. Many would say I’m biased in that I always bag the UMNO led Malaysian government and the opposition party in Australia, the Liberal party. What’s there not to bag…they’re a bunch of goons as far as I’m concerned. If they don’t know the difference between their bums and their head, you can’t blame me or anyone else for that matter for bagging them. Well today I’m going to show everyone that I’m “impartial” in that I’m going to rip into the Australian government, specifically their stimulus spending into the failed ‘Pink Bats’ scheme.

For those who don’t know the ‘Pink Bats’ scheme is a scheme concocted by Prime Minister Kevin Rudd, Environment Minister Peter Garret and their ‘brilliant’ advisers to insulate thousands of homes in Australia thus saving the environment but more specifically to create jobs for Australians. On the surface this seems like a noble idea but in reality it’s a terrible idea. Stimulus is a bad idea in the first place in that it’s not demand driven but supply driven by the government hence manipulating the market but this one is particularly disastrous in that it has now lost about 6000 jobs due to it being scrapped, so much for the ‘creating new jobs’ theory.

From the start this scheme was rushed in the hope that rolling it out as soon as possible would ‘create’ new jobs. Our brilliant treasurer Wayne Swan’s biggest nightmare is unemployment and to stave off the dire unemployment story all over the world which was knocking on Australia’s doorstep they decided to spend spend spend. How it was spent and where it was spent was immaterial just as long as it was spent! It’s easy to spend other people’s money right? Now comes the fact that taxes will have to be raised to pay for these largesse irks the hell out of me considering the amount of taxes I already pay in the form of income tax, land tax, water rates, council rates, GST etc. etc. etc…..the list is endless. The petrol that I buy with my after tax dollars is in itself taxed by the government!! I get taxed on my bank interest when the savings interest that is being taxed is the after taxed amount, the rest being taxed in the form of income tax or other forms of taxes before going to the bank in the form of savings. I’ve heard that for every one Australian income earned, more than 51% goes into taxes in one form or other but that’s a subject for another day and don’t get me started on that now otherwise this may take a few pages.

Anyway back to the ‘Pink Bats’ scheme. It was meant to be a $4 billion Energy Efficient Scheme that would give a rebate for installing insulation in the roof. The rebate was not to be given to the home owner but to the insulation company and amounted to $1,600. Many insulation companies were flogging off insulation for free. One pink bats supplier wrote on their website: “And, if you’re getting something worth up to $1,600 for free, why would you choose anything but the best?” The only problem with that was there were many companies created overnight that all of a sudden happened to be Insulation providers with no track record and no expertise to do the job well and safely. Some images captured on video showed kids on roofs helping with the installation! The result of all this was 4 unfortunate deaths and some 90 odd house fires attributed to dodgy installation. Apparently, the Environment Minister had several “warnings” but this was let to continue, as the bigger goal of spending our money needed to be fulfilled. Prime Minister Kevin Rudd defended his minister as “first class”. If that’s s first class minister then I don’t know what 2nd and 3rd class is. Maybe Tony Abbot can let us know. All he needs to do is turn around during question time and he won’t have to look far.

Peter Garret defended the scheme as a “good scheme” and blamed the specific installers and not the scheme for the deaths and dodgy installations. A couple of days later, he scrapped the scheme altogether without an ounce of prior warning and thousands were left jobless. Not only did he make one mistake, he corrected his first mistake by making another (bigger) mistake. Now you see why he too like the UMNO led Malaysian government and the opposition Liberal party deserve a bagging?

What’s going to happen now? Well as mentioned, thousands of installers are out of a job, not to mention the manufacturing that supports this industry, that’s a given. But further to this the government is going to need to do safety checks on the thousands of existing installations, rectify those that are dodgy which should be many considering the deaths and fires and send the inspectors back to verify that the job is done right this time…all at the taxpayers expense. So they’re going to spend more money now to rectify the “problems” and if spending is good for the economy, then I guess this too will ‘create’ jobs. Great job ministers!

Liberal Party's Climate Change 'Policy' - What a Load of Bull!

Not very long ago, Tony Abbott described climate change as "crap". It's no secret that the majority of Liberal and National party members do not believe in climate change and with a new leader in Tony Abbot I'm afraid things are not going to change. It's this then which surprises me as we see the nauseating sight of Mr Abbot climbing up roofs with solar panel installers smiling at every opportunity at the hungry media wanting to learn more about the new Liberal leader and his new climate change policy.

The thing is Tony Abbott's stance on climate change has not changed. It's still crap to him and to his merry band of hard line Liberal party foes, the likes of Barnaby Joyce and Nick Minchin. Why then does the Liberal party have a climate change 'policy' at all? This question was put to Mr. Abbott and his response was that their policy merely reflected the public's sentiments on climate change at this point in time. How committed to reducing green house gases then do you think Mr. Abbott would be if the only reason he has come up with a policy at all is to appease the public and not because he believes in climate change.

Now let's look at the Liberal Party's climate change 'policy' if you can call it that. This, according to Mr. Abbott is the magic solution to save our planet from destruction. Instead of putting a cost on emissions, he has decided to reward those, presumably farmers who 'act green', meaning the government will pay them to plant trees and practice environmentally sustainable methods to farming. The details in this however, are as clear as mud. Their 'policy' also rewards solar panel installations, which I presume was part of the reason why we saw Mr. Abbott on TV climbing up roofs looking like a sleazy solar panel salesman. As a note, no other developed nation has anything of a similar nature in their climate change policy as that proposed by Mr. Abbott. He is alone on this one but then again he is pretty much alone on his ferocity against the science espousing man created global warming when compared with other developed governments. Even developing nations like China and India have a far better grasp on the urgent action required than our free wielding solar panel salesman.

Let there be no mistake, those measures proposed by Tony Abbott are needed and will go some ways to helping our battered environment but one of many flaws with it is that it does not penalise the polluters. Within minutes of Mr. Abbott announcing his policy, the president of the 'Coal Association' appeared on TV, beaming with a smile that started just under his left ear lobe and ended close to his right ear lobe saying he supported Mr. Abbott's policy. Call me silly but the last person I want endorsing my green policy is the president of the Coal Association.

The policy highlights actions that governments should encourage the public to adopt but should never be the core of the government's climate change policy as it does not penalise pollution but rewards certain environmentally friendly practices. What happens if no one goes for the rewards? Does that mean that the policy does nothing at all? How do you tell the world that you're committed to a 5%, 10% or 20% reduction in emissions when you do not have an Emissions Trading Scheme? Mr. Abbott's solution is to tell the leaders of the other countries..."Aaaah we'll plant 1,000,000 trees and when they mature in 5 years time it'll be right mate...". Australia will be the laughing stock of the international community.

Mr. Abbott did not explain how he was going to fund the monetary rewards for acting green. The shadow treasurer Barnaby Joyce mixed up his millions and billions and likewise his billions and trillions when prodded further about the numbers. A $3.2 billion figure was bandied around and if that is the cost of saving our planet, then Tony Abbott really is a magician and I'm the tooth fairy.

The facts are the Liberal party has never been and are not committed to climate change. They've been forced to make a stance on climate change not unlike a child who's been forced to say sorry after doing something wrong and they've come up with this piece of crap they call a climate change policy. They haven't got the numbers worked out and the details are sketchy at best. There is nothing to say what they are proposing will reduce pollution by 5%, 10%, 20% or nothing at all. Who knows? Maybe Tony Abbott will consult the tooth fairy one of these nights and let us know.

If you want to see climate change tackled head on and not this airy fairy plant a tree here or there, throw in a solar panel here or there 'policy' then this latest charade perpetuated on a seemingly daily basis by the leader of the opposition should be given no more consideration than those Nigerian scams that pull wool over your eyes and take you for a ride.

Home Run Investment Opportunity for 2010 - They Aren't Making Anymore of it

I thought I'd share with you an interesting email I received from a finance/ investment group called the "Money Morning" group who dishes out investment views and stock tips for those interested. I just read it to keep my interest in the topic but have never really acted on any of their "advice" .....yet. This one about buying arable land I thought was very interesting.



Written by Dr Alex Cowie (Editor, Diggers and Drillers).

More politically sensitive than oil... more precious
than gold... more fiercely guarded than diamonds...


How an aborted South Korean raid on Madagascar unearthed the home-run investment opportunity of 2010


Read on for details of two ways you can profit
before the rest of the world catches on...


Dear Investor,

Over the past year, corporations in South Korea, Qatar, Bahrain and China have made moves to secure vast quantities of one extremely valuable asset.

These actions now look set to trigger a geopolitical land grab on a global scale. More importantly, they have already set off an impressive bull market.

I'm not talking about oil, iron ore or any 'conventional' commodity. This asset is far more crucial to basic human survival...

And because of that fact, the story of this 'land-grab' could be the biggest investment story you read about for the next ten, twenty, or even thirty years...

Yet these under-the-radar raids by Asian and Middle Eastern countries are just starting to be reported by the mainstream press...

Whether the investment public knows it or not these events signal the start of a shift in global power. A transition that's being dubbed "new colonialism".

A bull market so combustible
that it could topple governments
Make no mistake. I'm talking about high-stakes geopolitical poker. The competition for this asset could win and lose elections, topple heads of state and even start wars.

That may sound dramatic - but in the past eighteen months alone it has sparked riots in Kenya, Madagascar and Mozambique.

As serious as that sounds, it is also investment information that cannot be ignored. Where there is great risk, there is usually great opportunity too. As Baron Nathan Rothschild said in the 18th century, "The time to buy is when blood is running in the streets."

Investment heavyweights like George Soros, Jim Rogers, and Lord Jacob Rothschild (a direct descendant of Nathan) have already put this old aphorism to good use.
Each has made a big investment in the asset I'm going to tell you about.

But don't worry: you don't have to be a Rothschild to profit from this idea. And you don't need to travel to a foreign war-zone either.

This is your chance - from the comfort and safety of your own home - to...

Invest like a billionaire
Most private investors won't have a clue how to capitalise on a long-term trend like this. You see guys like Soros and Rogers making million dollar moves and you think it's not possible for ordinary investors to do the same.

Well, that's partly true.

If you want to invest directly in this precious asset, it doesn't hurt to have a spare $100 million to chuck around. That would allow you to take a large position.

Quite frankly, that's not necessary. My research shows there are at least two investments that are primed to ride this bull market for the next 20 years and beyond... and I want to tell you about them today.

Getting your stake today - which can be done as easily as picking up the phone - is your chance to enter a world where high-net-worth players like Soros, Middle Eastern Sovereign Wealth Funds and gigantic companies like Daewoo are jostling for position.

It couldn't be any easier to settle in alongside the big players in what I think will be a massive investment story for years to come.

But just because you can doesn't mean you should.

So why should you?

Let me give you the full story...
I'll start by taking you nearly six thousand miles west of Perth - to the African island state of Madagascar.

Recently, the population of this tropical island awoke to find that 1.3 million hectares of the country - were about to be sold to South Korean conglomerate Daewoo.

That's right. A public company was gearing up to purchase enough of their land to from its own small country!

Not only that - this proposed sell-off constituted HALF of Madagascar's arable land. "Arable land" is an agricultural term for land that can be used for growing crops. In other words, its land you can turn into food.

This kind of land could be one of the scarcest, most valuable assets in the world shortly.

And it explains why a company better known for making cars and TVs decided to put in a bid to own half the farmland of a country thousands of miles away from Seoul!

Daewoo had the idea of growing massive quantities of corn and palm oil in Madagascar and shipping it back to South Korea.

Their purchase almost went through - but was vetoed at the eleventh hour by leader Andry Rajoelina because he was made acutely aware of the political sensitivity of 'selling off' sovereign land to another country.

Daewoo's aborted purchase was sensational - and the biggest proposal of its kind - but not unique. All over the world, companies from China, South Korea, UAE, Saudi Arabia and Abu Dhabi are buying up arable land on behalf of their governments.

There are even foreign companies actively seeking to buy farmland here in Australia - to grow crops in order to feed their own people...

I'll leave the emotional argument to one side for a moment to concentrate on the economic and investment angle...

A Great Chance for You to Profit
From Insatiable, Infinite Demand
These firms know that the supply of quality global farmland is limited. The human appetite, on the other hand, is not. And if you hadn't noticed, there are more mouths to feed than ever before. Even here in Australia the population is set to grow by 30 million over the next forty years.

It's an especially urgent problem for countries with little arable land relative to their populations. South Korea is rich. But money can't make the land within South Korea's borders more fertile. So it must look elsewhere to meet its needs.

Even countries with small populations are worried. Why? They are now competing for food with countries like China, Russia, Brazil, India, and many other nations in the developing world.

The obvious strategy is to purchase assets where land is cheap.

Simple maths - more mouths, less land - make it clear food and agricultural resources are primed for a big run. Everyone wants them. Everyone that has cash is willing to spend it if it means food security.

Believe me, we've only seen the tip of the iceberg in terms of demand.

The UK government's chief scientific adviser recently claimed global demand for food would grow by a staggering 50% in the next 20 years. Take China alone. A population of 1.3 billion people is getting wealthier, living longer and more accustomed to eating meat and dairy products.

That means more grain is needed to feed cattle. And more rice, soya beans, wheat and corn is needed to feed families.

Where will the land come from to grow all that food?

China currently holds a fair chunk of the world's farmland - nearly 10% in fact - but it also has 20% of the world's population.

Unless you can make your land infinitely more productive (you can't) the only solution is to go after arable land in other places. Places where arable land is abundant. And more importantly, where it's for sale.

Let me tell you this. China is going after any land it can find.

According to The Daily Telegraph, China's Suntime International Techno-Economic Co-operation Group - acting on behalf of its government - is currently trying to buy or lease a number of Australian farms!

You can see why this is so sensitive - and why people are up in arms...

Introducing the 'New Colonialism'
Just as the European powers embarked on the great 'Scramble for Africa' in the nineteenth century, so too are Asian and Middle Eastern countries, securing vast tracts of foreign soil today.

But the New Colonialism is not about power and prestige. It's about something simpler: food.

Just take a look at some of the deals cut in recent months...
Mozambique has signed a $2bn deal that will involve 10,000 Chinese "settlers" on its land in return for $3m in military aid from Beijing
South Korea is now the proud owner of 690,000 hectares of Sudanese farmland
Saudi Arabia is negotiating to buy 500,000 hectares in Tanzania
The Indian government has lent money to 80 companies to buy 350,000 hectares in Africa and recently lowered the tariffs under which Ethiopian agri-products can enter India
Qatar will get 40,000 hectares of Kenyan land to grow food in return for building a $2.5bn deep-water port at Lamu in Kenya
One of the biggest holders of agricultural land in the world is the Indian company, Karuturi Global, which has recently bought huge areas in Ethiopia and Kenya
Even here in Australia, Saudi Arabian, Chinese and Kuwaiti companies want to buy more than $1 BILLION worth of our farmland.
Make no mistake - this IS happening. And it's not only stunning news, it's an important investment opportunity as well. One you are well advised not to ignore.

Food prices on a knife-edge
are fuelling this bull market
Think back to 2007 when droughts sent wheat prices here in Australia soaring from below A$250 to A$492 in just four months.

Countries like China and South Korea aren't going to risk being caught out when growing prosperity puts a major squeeze on food prices. Instead these countries are buying up as much land as possible in countries where it's cheap and plentiful - in Africa, in Cambodia, in Pakistan, in Kazakhstan, in the Ukraine - and even here...

And this means there's going to be a massive surge in prices for farmland over the next few years...

This is a surge you could profit steadily from if you play your cards right...

Prepare your portfolio for
this geopolitical earthquake
The two investments I want to tell you about present you with a golden opportunity to get in at the beginning of what could easily be the most powerful bull market of the next two decades.

Events on this scale are rare. They only occur when economic trends intersect with history, demographics, and geography. A scarce or limited supply of a certain commodity runs headlong into exponentially growing demand.

The California gold rush of 1849 was one such event. So was the 1851 gold rush in Victoria. And so was the 1901 Spindletop oil find in the plains of East Texas. You could also argue that the discovery of iron ore in the Pilbara in the 1950s was one such event, although it played out over a longer period of time.

The point is that when a particular asset enters a phase of massive demand growth, you stand to make a lot of money. When all these different forces to combine, they deliver some phenomenal profit opportunities...

Let's look at three such examples from more recent history...
It's hard to imagine now, but in January 1989 the NASDAQ index stood at around 401.3 But as the world embraced (and then went insane about) the possibility of the Internet, the NASDAQ topped 5,000 in March of 2,000— a gain in tech stocks of over 1,000% in just over ten years.
At the bottom of a 20-year bear market in commodities in 1998, a barrel of West Texas Intermediate crude oil was fetching just US$10.82. But as the economic growth of the BRIC countries and a war in Iraq put pressure on energy resources, oil eventually climbed to nearly $145 a barrel by July of 2008— a jaw-dropping rise of 1,240%
And even whole stock markets and economies can power ahead when the underlying trend is strong. On the 31 December 1979 the Nikkei 225 closed out at 6569.47... Ten years later, on 31 December 1989, it closed out at 38,915.90...a 592% gain as the Japanese 'economic miracle' reached fruition.
Of course all of these booms eventually became bubbles. In the case of the Internet, the earning power of the underlying assets never justified the huge valuations investors placed on them. It was all pie-in-the-sky speculation.

"Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050. With limited land and water resources, this will automatically lead to increased valuations of productive land."


Joachim von Braun,
Director General
International Food Policy
Research Institute.

But before they gave way to rampant speculation, the bull markets in Japan and oil WERE based on strong underlying economic and historical trends. And if you correctly read those trends early in their duration, you were already in possession of a powerful investment advantage.

In fact, I'd say that being right about an asset that's in the early stages of a multi-year bull market is the most important element to your success as an investor.

Every so often seismic events occur - events that change the structure of our world. New technologies, wars, power struggles over scarce assets...

When these events occur, MASSIVE profits are there for the taking - and the people who make the most are the ones who spot these developments early, put their money in a few smart places, sit back and watch it grow...


Even the global financial crisis
has made serious money for
forward-thinking investors...
Think of Michael Swenson and Josh Birnbaum, two Goldman Sachs traders who made nearly $4 billion betting against subprime mortgages in 2007 (while Goldman was still packaging up and selling subprime loans via CDOs to its clients).

Or John Paulson, the hedge fund manager. Paulson made $3.7 billion betting—among other things—that U.S. homebuilder shares would collapse and that Lehman Brothers would fall.

The thing is, those were risky bets in the sense that these traders were 'short' a market. They were betting that asset prices were too high and irrational. The risk, as John Maynard Keynes once famous said, is that "Markets can remain irrational longer than you can remain solvent."

Making money from undervalued assets doesn't involve leverage. And you don't have time working against you. You're either right or you're not. But if you're right, the upside is every bit as big.

That's why I believe it's in your interests to read the special analysis I've prepared on the two investments that stand to make the most out of the bull market in arable land.

I'll tell you all about them, and exactly why they occupy such an enviable position in the report. I'll also tell you at what price I recommended their shares to readers of my resource newsletter, Diggers and Drillers – then you'll have all the information you need to take a punt.

Suffice it to say that if you could make room in your portfolio for these two gems, you stand a real chance of making your first profits while the rest of the world is still learning about this opportunity.

There are no guarantees, of course – but I think this will be one of the investment themes of 2010. When the rest of the market finally figures it out - and eventually it will - I reckon you'll have cause to thank me many times over.

You see this is going to be HUGE...

The Third Wave of the
Agricultural Revolution
You only need to open your history books to see the impact that changes in food supply can have on the world.

In the 1700s and 1800s, as people flocked to work in newly industrialised cities in Britain and hygiene and health improved, the UK's population grew.

Demand for food soared. People panicked. Thomas Malthus famously predicted a famine that would shave down the population until it was level with food supply. He was predicting one of those rare intersections of economics with geography and demography.

But then history swerved. A massive expansion of global farmland took place.

Malthus never anticipated the boom in arable land that was just over the horizon. As farmland expanded, new techniques to increase productivity were introduced too. Groundbreaking farming technologies were introduced. Piecemeal plots of land were condensed into larger farms.

Eventually countries like Australia, New Zealand, Uruguay and Argentina began to ship meat and grain to satisfy burgeoning European populations. At the same time the USA expanded into the farmlands of the Mid-West.

The first wave of the agricultural revolution actually depressed food prices. Supply grew faster than demand. Abundant food made it possible for populations to grow.

The second wave of the revolution led to even more people. "The Green Revolution" in India in the 1950s and 1960s saw the increased use of irrigation and fertilisers and high-yield seeds. It went a long way to ending famine in India.

But it also led to an even faster explosion in the global population, which brings us to where we are now....

The new agricultural revolution will DWARF what has gone before
Of the world's estimated 6.7 billion people, only 1.2 billion live in what the UN considers to be 'developed' countries.

That means another 5.5 billion people are playing catch-up. And the two biggest countries by population, China and India, are well on their way - and already securing the land they need to feed their newly industrialised populations.

They realise that land is now scarce. People are abundant - but only so long as there is food to feed them. The developed world realises this too. And now the race is on...

If you take only one thing from this letter, I hope it's this: Daewoo's bid for farmland in Madagascar... Middle Eastern interests in Africa...Chinese settlers in Mozambique... these are just the start of the global land grab.

Even the UK is in on the act with the company Landkom International leasing over 10,000 hectares of Ukrainian farmland; the 'breadbasket' of the former Soviet Union.

By now I think you can see that rich and poor countries alike are aware that there is one extremely valuable asset for the future.

And it's an asset that you can't make any more of. You can only buy it.

It's estimated that in 1960 there were 1.1 acres of arable farmland per person. The Food and Agricultural Organisation of the United Nations puts that figure at just over 0.5 acres for 2030.

The maths is inescapable. More people. Less land to grow food for them.

It's a basic question of supply and demand...

That's why legendary commodities investor Jim Rogers has already stated "this is going to be one of the best investments of our times."

I believe we're about to witness a 'seismic profit event'. There's a very real chance for early investors to make big, big gains over a period of 5-15 years (and possibly long beyond that)...

The question is: how you can compete with George Soros, Daewoo and Jim Rogers in getting a slice of the next agricultural Bull Run?

Well, I'll tell you...