Agmates

In 1987 country down the road sold for $1000/acre, eight years later an adjoining, better farm sold for $650/acre. Another larger farm was re-sold with a 60% discount in three years. Luck in one’s timing is vital.

I heard a good story on the luck side. Arab Emirates executives recently flew out from Sydney in a helicopter to finalise a land deal on the west of the sandstone curtain. They dismayed the agent by rejecting the property. As they flew back they looked down on a two thousand odd acre valley ringed by cliffs. They said “That’s it, land the helicopter”. The pilot did so. Two old cattlemen appeared wondering what was going on. They were told that the visitors wanted their land –with no changes to the old buildings or fences. Their wonder reached new heights when they were told that $12 million was being offered. They accepted. There aren’t many stories like that one.

I see another major correction coming. Australian land and house values are higher than in many areas of the USA and France. We have no Government support for agriculture, a far less reliable rainfall and much lower population pressure. Any return on capital in most areas, particularly as the drought continues –lies only in capital gain. That is unsustainable. Our values make no sense on a Global basis.

The past ten years have seen my land value (in our inflated currency) more than double. Goulburn, with severe long-term water restrictions, sees housing for sale with 100% financing available. This is a replica of the US low doc loans, which are just beginning to unravel.

The past week has seen the head of Wells Fargo—a large US bank; say that real house values in the US are now the worst since the Great Depression. A judge in Ohio ruled against one of the world’s largest banks, which tried to re-possess 12 houses. He ruled that they didn’t have the documentation to prove that they owned the mortgage. The paper shufflers of finance have got so good at spreading risk that they no longer know who owns what!

The Governor of the Bank of England added to the gloom by predicting large falls in the stock exchange and in English housing values.

What has all this got to do with us? Plenty.

National Australia Bank’s announcement that they would make at least two more interest rate rises (despite predicting higher profits!) because of their difficulty in sourcing finance in a credit strapped Western world is a wake up call. Our $545 billion foreign debt is coming home to roost. Heavy debtors must pay a premium.

Recently the world’s central banks (Reserve Banks) created and pumped over $300 billion into the their mates’ banks. The US Federal Reserve added a year’s inflation figure to the money supply -a figure that they stopped publishing in 2005 to conceal the rampant inflation that is destroying the value of their currency. Their dropping interest rates are a sign of sheer panic.

The Argentine Government is in big trouble for doctoring its CPI to keep pension and superannuation payments down. I have long believed that Australia’s CPI has not been a reflection of the increased costs that the people are carrying.

Treasurer Costello added to my belief when he replied to a question from a journalist on rising food prices leading to another interest rate rise. He unwisely quipped “ Don’t worry, we’ll alter the CPI basket weightings”. He should have launched into singing a few bars of “ Don’t cry for me Argentina”.

When the US no longer had enough gold to back the banks in 1971, President Nixon substituted paper. He had the US default on the rest of the World.

The current Governor of the Federal Reserve, Ben Bernanke, has said that he would prevent a recession by printing money round the clock and dropping helicopter loads. The wheelbarrows of Germany’s Weimar Republic come to mind

When vast sums of money are created, that money must be devalued. Economists call it “supply and demand” in every other commodity. The lowering of US interest rates sees even more international investors fleeing the greenback.

The famous US banker, JP Morgan called a meeting of bankers in 1910 and planned a US Federal Reserve Bank made up of his fellow bankers but backed by the Government. This ensured that none of them went broke as Government couldn’t afford to have people’s savings lost. US licensed banks have depositors guaranteed up to $100,000 should the bank fail. America’s Federal Deposit Insurance Corporation ‘s fund is built on charging banks premiums on deposits. Depositors are given a privileged position in bankruptcy law.

In UK the revered Bank of England has recently wrestled with the “ run” on Northern Rock Bank. Initially the Governor wouldn’t intervene and then as panic spread he did a U turn and guaranteed deposits up to 100,000 pounds

Here, in Australia, deposits have never been guaranteed in any but the old Commonwealth Bank. Banks had to have 10% of lendings in reserves. However, in 1998, the current Government removed the safeguard.

As we go into hard times we should ask- Our Government gives bankers the privilege of creating credit and massive personal wealth. Will our Government give protection to our depositors if things go “pear shaped”?

When Howard replaced Keating in 1996 his electioneering featured cartoons of “Keating’s $180 billion debt cart”. The debt is now $545 billion. We have had 66 consecutive months of trade deficits during a mineral boom! Canberra doesn’t understand that “When you are in a hole and want to get out of it the first thing to do is to stop digging”.

They have just kept digging with their free trade shovels. We are disappearing under a mountain of debt- $30,000 for every Australian man, woman and child and rising by the month.

Why do we have the second highest interest rates in the OECD ?—because we have to service the second biggest per capita debt in the OECD and unlike the USA, we don’t have the power to claim that ours is the world currency and we can continue to print it with no backing.

New Zealand and Australia are the least protectionist countries in the world. We now import tomatoes from subsidised Italian farmers and all sorts of food from subsidised Communist China.

We have destroyed our manufacturing industry and are well into destroying our agriculture as the orange, milk, sugar industries etc are deregulated or sunk by subsidised US, EU and Chinese farmers.

But isn’t globalisation good for the poor people ? The people of 47 of 50 African countries and much of South and Central America have gone backwards under free trade and US multi national company thuggery. That is why they have sunk the Uruguay WTO negotiations with mass protests by desperate people. That is why the US multinational dominated WTO now meet in isolated centres.

Since John McEwen’s decisive leadership we have had Canberra bureaucrats at DAFF and NFF running a“ free trade and to hell with the consequences” agenda. The policy has decimated our agriculture and manufacturing in antithesis of Pliny’s AD 69 call to Rome “ We must, whatever happens, safeguard the family farm”.

When I went to Paris in 1983 on my Churchill Fellowship tour and met with OECD officials they told me that they originally thought that Doug Anthony was joking when he called for them to drop subsidies to farmers. Gradually they have dismissed Australian negotiators as fools as they continued to increase their subsidies with the US following and now China doing the same. We should abolish the calls for the dropping of US and EU subsidies and begin to look after ourselves.

But what about our beef access to the US under the FTA?

We haven’t filled the quota for 5 years and are unlikely to ever fill it again as drought and alternative land use lower our herd. The USA has the right to put on duty if their domestic price falls.

But what about our mineral exports to China?

They have nothing to do with agreements—they are market forces at play. We have no free trade agreement.

If we import half our food from subsidised farmers in EU and China and continue with the current, suicidal immigration policy, it is only a matter of time before we import all our food and have to de-salinate water for all our capitals. Canberra nut cases are running us.

I say “Send anyone who advised Federal Trade Ministers - to a new Office for Sustainability, located in Birdsville”.

Australia desperately needs drastic change in policy.

Pauline Hanson has shown her courage in standing up for commonsense. Almost all her maiden speech has been implemented by the current Government (whilst some of them organised a prison sentence for her on fraudulent grounds that were subsequently thrown out by the Chief Justice). She has shown that democracy is a very fragile system when thugs take over.

It is ages since the Liberal Party was formed and the Country Party became the Nationals. It is time for a new direction, a United Australia Party.

Pauline Hanson symbolises what Australia needs to survive as an independent nation. Should we get the balance of power in the Senate it will be a great beginning.

I will be working with her all the way.