ECO latest info

Hola Eco gang,
thought I would make sure you are out there and thinking like the guru.

So I have a number of things for you to consider.

1) If you want the absolute up to date information, or have questions you need answered then call the HSC Advice line on 131112. It is open from 4pm to 10pm from 2-4th Nov for Economics, Check out this link if you want dates for other subjects.

2) The latest inflation figures show that underlying inflation is 3.5% and this is why the RBA put up rates by .25% in for the first time in 18months in Oct. The underlying rate is the important figure for the RBA, so whilst headline inflation is still only 1.3% and thus below the 2-3% target, the underlying figure is important as economic conditions being weak is the only thing holding inflation from soaring.
Thus Australia has an underlying inflation problem- which the RBA only has 1 way of dealing with this issue. Unfortunately this will not solve the problem (this requires micro reform regarding productivity and infrastructure investments)
SO when the RBA meets on this Tuesday (which is always put into the background some horse race) it will be interesting to see what happens.

3) The latest figures I have are as follows;
12 months ago
Growth 0.6% June 09 2.7%
Unemployment 5.8% Aug 09 4.1%
Inflation 1.3% Oct 09 4.5%
Household savings -0.4% Sep 09 +0.9%
cash rate 3.25% 7.0%
current account -$38.4bn -$72.5bn
ToT 109.0 Jun 09 120.1


Good luck.

1.5% inflation = interest rate rise??

The latest RBA meeting on the 6th of October has signalled the end of what Glenn Stevens has called a 'mild downturn'. After holding interest rates at 3% for 12 months the cash rate has now started heading up (though only slightly ) after the RBA decided to put them at 3.25% on Tuesday.
After Lehman Bros in the U.S filed for bankruptcy in Sept 2008 the RBA cut the cash rate by 4.25% over a 6 month period in a bid to prevent major credit and AD issues in Australia.
Thus the signal that Australia's downturn is possibly over has been given by the RBA. If you want to read why G.Stevens believes Australia avoided the major problems experienced in the G7 in particular then read this concise summary.
The question remains- Is Australia out of the recession? and why is the cash rate rising when inflation is still below the 2-3% target range?
Wll the answer is a pre emptive strike, a move to curb excess borrowing at a low rate of interest and to send the market a signal.
Of note is that unemployment has fallen very slightly from 5.8% to 5.7% which is a further indication of a return to expansionary conditions. What will be interesting is that Glenn Stevens also said "a degree of policy discipline will be needed". This means that he expects fiscal policy will also slow down its expansionary phase and that spending will decrease- however will this happen in light of the fact that the next Budget leads up to the next election?
It will be interesting to see what the ALP does??

Economics of climate change

The Stern review is the most comprehensive economic based report into the impacts of climate change, it also explores possible actions which need to be taken and the consequences of taking no action. Lord Stern is British economist.

The Stern Review states "our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century. And it will be difficult or impossible to reverse these changes."

One of the considerations of climate change action by Stern is that developing nations should have the opportunity to reach the same level of living standards as developed nations.

Stern recently updated his report to say that 2% of GDP needs to be invested to avoid the worst impacts of climate change.

Stern Review

Check out this SlideShare Presentation:

Stern Review

Investigation into medical devices

A good example of the ability of self regulation to control its own behaviour has been llustrated via a recent investigation into medical devices. Trips to Germany, payment for a polo festival, doctors flown to the airport in a helicopter to avoid peak hour traffic and extraordinarily large consultancy fees. All of these behaviours have been found to exist in Australia as the pharmaceutical companies attempt to influence the purchase and supply of medical devices to patients/ consumers. Whilst the regulation of the goods themselves is controlled by the Therapeutic Goods Administration (TGAct 1989 and recent Therapeutic Goods Am (Medical Devices) 2002 the adverse situations which occur need to be reported by the supplier . The figures below show the increase in injuries and casts questions on this self regulated system.

Medical devices include a wide range of products such as medical gloves, bandages, syringes, condoms, contact lenses, in vitro diagnostic devices, disinfectants, X-ray equipment, surgical lasers, pacemakers, dialysis equipment, baby incubators, heart valves. Some of these are actually placed inside a patient and most would be reluctant to challenge a doctor about the brand specified of a pacemaker. To read the articles see the following links
Drug Mone hurts our credibility 7th Sept 09
Meals, trips used to sway choice of devices 7th Sept '09
Kicbacks, kickoffs at World Cup 8th Sept'09

The most telling criticism is to the SMH from a doctor.

Regulation needed to make device advice transparent

News that the medical devices industry is paying millions to doctors for entertainment and ''consultancy'' fees should come as no surprise, given we have heard it all before with the pharmaceutical industry (''Meals, trips and transport used to sway doctors over implants'', September 7). The latter industry self-regulates via a code with holes in it that one could drive a semitrailer through.

Both the pharmaceutical and devices industries have a duty to do everything they can within the law to make a profit for their shareholders. They do it through influencing doctors. We doctors are human and, like everyone else, we are influenced by marketing and money. The effect is that taxpayers pay for drugs and devices that at best are the most expensive choices and at worst lead to unnecessary deaths.

When will the Federal Government step in to regulate this dangerous and inefficient system?

Tim Woodruff President, Doctors Reform Society, Richmond (Vic)

Supply is important for the long term

Whilst supply side economics has taken a temporary back seat at present it will need to return in importance for Australia to shake off the underlying issues that existed prior to the recession. That is the recession we didn't have, although we are still in it. The issues of competition, low savings, underlying inflation due to skills shortage, infrastructure and a appreciation in the $A all will serve to lower our international competitiveness.
Sidenote why is the $A about to appreciate? Well the financial markets are already predicting that by the end of the year our interest rates will have risen by 0.5 and a further 1.0 next year to slow inflation. If you compare our interest rates to the rest of the world there is already a major differential. This means that if our cash rate moves first it will attract investors and speculators, leading to lower returns for our exporters.

So as Gittins has pointed out recently in PM won't be a great leader the Rudd government needs to make some hard decisions and why not now? Politically there is no serious competition and secondly the time is ripe when the economy is in the need of injections. The article points out 5 areas that Rudd has already considered; competition, innovation, skills, infrastructure and tax reform. There is debate whether all of these involve micro reform however there is a need for change.
In light of this as Henderson (Rudd will need reform for recovery) points out that flexibility is key to future growth. It is of particular interest to compare this article to Gittins' No such thing as a free market. to see a contrasting view regarding the direction of labour and financial regulation.
Which one do you believe is the direction Australia should take? It would be great to see some responses to hear your thoughts???

p.s if you are after some more reading on micro policy and another viewpoint check out Mr. Woods (VCE link to your right) in Topic 4- micro and Topic 3- Allocation of resources.

Arrg help me with Economics

This will not provide the answers to the Eco trial. However if you are not sure how to explain a concept or want it explained in another way you should investigate Mr. Wood. This web site may provide you with some additional confidence. If you go to his site which is actually set up for the VCE or Victorian equivalent of the HSC it has some great information, history and analysis.
Unit 1 is intro and yr 11 work
Unit 2 is globalisation and trade policy.
Unit 3 is economic issues.
and Unit 4 is the role of government and government policies.

If you choose say Issues- External Stability and then go to the bottom of the page it then goes through page 1 definitions, 2- Measurement, 3- Terms of Trade, 4- Measurement limitations, 5- recent Aus performance, 6&7- demand factors, 8&9- supply factors, 10- policy approach, 11- International comparisons.

Another point of note is that the statistics button shows graphs and history of the important economic indicators with explanations. If you are after the very latest figures the best site is the Reserve Bank which has the cash rate, inflation and latest exchange rates on the front page if you after more than this then go to the chart pack and investigate further.

Lastly as I mentioned the other day a good source of updated info for your case study is the Economist web site- go to the Country briefings on the left and then all country briefings- it has sepcial links to the BRIC nations but up to date on many, many others.

Good luck.

Plea Bargaining - reform of vicitms' rights

A discussion has resurfaced regarding the balance of rights of the victim versus the offender's rights to defend themselves in a court of law. At present the 1996 Vicitms Rights' Act has a charter of rights to protect victims. This can be read in full on the Austlii site, with the charter setting out that a victim should be kept informed about bail, release of the offender that they be given support to present a victim impact statement and that they can be relieved from attending preliminary and committal hearings.
However one case in particular has given the impetus for future reform. A woman survived a brutal atatck from an ex partner who had stalked her for several years. He savaged her face with a knife and left her with brain damage to then be charged with attempted murder. The charge was reduced from attempted murder to malicious injury with intent despite her not being informed about this change in the charge. All reference to the knife had been removed from the trial- this difference being 25 yearsfor attempted murder to the standard period of 7 years. For further reading on this case see "Forced to take on the system" .
Thus with this in the background the Sentencing Council which is one of the key agencies of reform has been instructed to begin a paper on plea bargaining.

This is good information regarding the process of reform, the nature of society changing and rights of victims'.

China- can't stop its influence

In the past week China has dominated the news for many reasons. First they arrest an Australian man working for Rio Tinto on the basis of him possessing state secrets. See this is when things get interesting, if a company - Chinalco is run by the government ( their chairman is on the Central Committee of the Communist party) then possessing information about this company becomes a state issue. The resolution of this issue could severly hamper our future trade and economic direction.
Then we get information that China's growth and thus demand for our exports is kicking along nicely. So economists have been saying the Australian economy is strongly linked to China, however China is maintaining a strong grip on change happening too fast at the moment.

In the same article there is some concerning news regarding unemployment - Long term unemployment has reached 107,000 people (out of work for more than 1 year) which means structural unemployment will also increase.

As a last thought the guru article yesterday was worth a read. Asia Pacific- which includes China still has an extraordinarily large amount of people in this region live in extreme poverty. (900 million live on less than $1.25US a day) So despite the large amount of growth and newsprint about the future of China as an economic power a large amount of people have not really benefited yet from the changes to the economy as a more open, globalised entity.

Yr 12 ECO information and Review

"I would rather be vaguely right, than precisely wrong." - John Maynard Keynes

An interesting philopsophy indeed.
This is more information for you upcoming trials and a source of information rather than an alternate source of reading.

Here is the as promised, you can either download it or watch through the blog. External Stability powerpoint

Australia's External Stability

Uploaded on authorSTREAM by Camsutt | Upload your own presentation

I have discovered a good quality web site that may assist you with your understandings and concepts of economics. It is based on the Victorian equivalent of the HSC, however the course is similar and has the same economic concepts.

Here is the link to the site named Mr Wood.

Are we out of the recession?

Well for a political junkie like myself a week when the great smirker Peter Costello retires after all the time he has spent coveting the leadership of the Australian Liberal Party, is a week to comment upon.
Costello despite the efforts by Howard to downplay his efforts deserves credit for the position that the Australian economy now finds itself. As Peter Hartcher stated in his article this week,

"Keating imposed the structural reforms that woke Australia from its economic coma and created the beginnings of a modern, competitive economy. And Costello imposed the discipline to prevent the political system from bogging the country down in a mire of government debt"

There is no doubt that without Costello the Howard government would have blown a considerably higher proportion of the commodities boom. The result is that Australia has been able to cope with the recession better than any other developed country due to the subsequent budget surpluses and negative public debt. The following graphs from the Federal Treasury show Australia's Economic growth to be higher than all of the top 20 economies and to have lower net public debt than all of the top 5 economies.








However the question that needs to be answered is - Is Australia out of the recession?? (give the poll a go). After reading Gittins from the 13/06/09 a number of points are raised. Our recent trade performance has been exceptional- why? Well the Australian dollar feel sharply which meant that exports received an advantage and imports were higher. Combined with lower demand for imports by Australians in a downturn has meant that our trade performance has been very good. In addition during a recession manufactured good demand falls- now we our economies structure is weighted towards services and commodities. The demand for these has been steady.

However with the dollar heading back to 80c/US, business confidence picking up and thus higher imports combined with the prices gained for our exports sliding the future for Australia is not rosy yet.

New World Order!!!

There are a considerable amount of conspiracies floating around out there that perpetuate the idea that the USA has attempted to change the balance of power so that they are in total control.
The evolving nature of world order means that there has been constant change since the end of the Cold War and the demise of communism. If this peaks your interest then you could try a number of avenues for further research.

Here a number of links that will make you think. I am not trying to sway you either way, merely encouraging you to challenge the accepted beliefs and always question.

New World Order- details.
The basic idea of the concept is that very powerful forces would cause conflict and situations which require solutions (e.g East Timor independence) which will require outside forces i.e the UN to enter sovereign land and then retain control post the conflict. The end goal is a totalitarian world government.
If you are interested further try the videos on this google search.

If you want some relevant information to the World Order syllabus then start here.
For example you will find information about the UNMIT (United Nations Integrated Misson in Timor Leste) which maintains a policing and training role in East Timor to encourage democratic processess to be constructed in this new nation state. They have supervised volunteer collection of arms, swearing in of judges and administered a serious crimes unit which is investigating human rights breaches dating back to 1999.

Budget Leaks and Wrecking Balls

As May comes around the chatter amongst economists and interested people regarding the Budget begins to build steam and this year it appears to have started to have happened quite early. With the background being the global financial crisis (or GFC as some have named it- sounds better) this means that many items on the ALP wish list will be placed on the chopping block.
Here are some of the items that have been considered;

• paid maternity leave (min 6 weeks)
• upgrade to the aged pension and unemployment benefits
• increased funding for universities
• continuation of 'Education Revolution'
• whether the incentives for first home buyers should be continued
• environment incentives e.g insulation
• tax cuts (which were introduced as part of election campaign in 2007)
  

However with unemployment heading towards 7% (which obviously increases transfer payments), company and income tax revenues down it is obvious that a number of these items will be merely wishes. At the least Australia is heading for a Budget deficit of $30-50 billion.

Compare these issues to this article from the SMH (by Jonathon Pearlman) regarding defence spending. What are your thoughts on defence expenditure and where the funds could/should go???

Illustration by Rob Homer , SMH.

Is Rudd the Australian ambassador of China???

Good luck, sleep well and remember the basics. (fact, explanation, example) and make sure your answer is balanced without becoming an emotional diatribe.
Hope I have some interesting marking ahead.

Eco- Is Foreign Aid good for Africa?

On the 17th of March, Foreign Correspondent (yes on the ABC) had an interview with Dambisa Moyo a Zambian-born economist. This is some of the information from the ABC web site.

"In her new book, Dead Aid, she argues that official aid is easy money that fosters corruption and distorts economies, creating a culture of dependency and economic laziness.
Moyo is particularly dismissive of the ‘celebrity aid’ model popularised by international stars such as Bob Geldof and Bono and says many aid organisations and NGOs are more interested in perpetuating poverty in order to justify their own existence."

Interesting thoughts indeed. Moyo is a believer in trade and the power of the market as opposed to the aid model in which she claims the only growth occurring is in the Swiss banks accounts of the political elite.
Lastly she claims that 10 percent of Africans were living in poverty in the 1970s compared to 70 percent now.
What do you think? It would be good to hear some comments for a change.... (PS this is not a new concept it is new for an African economist to be suggesting it though)

Legal - Modern day slavery

The Wei Tang case is very important regarding human rights and the definition of modern slavery in Australia. It was eventually found that ownership is an old fashioned definition of slavery however that 'control over freedom and movement' and to be 'deprived of choice' did exist.

It is estimated that between 400-1000 women (Project respect) are brought to Australia every year for the purposes of sex work and the UN estimates that up to 4 million people are trafficked yearly.

Sex Slavery- the Wei Tang case involved the first person to be charged guilty for possessing of sex slaves. Five women were brought to Australia and told they had to work off debts of $45,000 before they could earn an income. Wei Tang received 10 yrs in June 2006 from the Victorian County Court.
On appeal "her convictions were quashed and a fresh trial was ordered after the Court of Appeal ruled directions given to the jury were inadequate." The prosecution then appealed to the High Court which upheld (agreed) with the original decision which means she is /was guilty. SMH Aug 08.
From an Australian legal point of view this is a landmark case as Weng argued that she was involved in debt bondage not slavery. The Criminal Code Act 1995 (Cwlth) is the issue and the actual defintion of slavery. After hearing the appeal the majority of High Court agreed that the defintion which comes from the 1926 International Convention to supress the Slave Trade was correctly applied.
For additional information see Madam or slave? (The Age) or for a comprehensive discussion see this ANU report which goes into the legal detail.

Yr 12 Eco; An interesting week (updated 11/3)

The past week has been an interesting week in the world of the Australian economy. Statistics seem to drive the political cycle and this makes for interesting viewing in the times we are currently living.
On Tuesday after the RBA decided to hold interest rates on hold for March (after 5 succesive cuts of the cash rate from 7.25% to 3.25%) in a 'vote of confidence'.
In his statement on 3/3/09 Glenn Stevens stated "In Australia, demand has not weakened as much as in other countries and, on the basis of currently available information, the Australian economy has not experienced the sort of large contraction seen elsewhere."

Then on Wednesday the figures the government has been dreading were released. The December quarter growth (GDP) figures showed the economy contracted by 0.5%. This is the first period of negative growth since Dec 2000. The ABS figures also showed that the end of year figures (0.3%) were the lowest since 1990.
Interesting the manufacturing sector contracted by 4.7% and the TCF by 8.5%. On the positive side the agricultural sector expanded production by 10%.


Finally today (Mon 9/3) the World Bank has released a report stating that the volume of world trade will decline for the first time since 1982. Secondly in a report the bank has prepared for next weeks G20 meeting the World Bank states that the world economy will shrink for the first time in 60 years. They have advised developing nations to monitor their banking sectors and to stay away from protectionsim which in their view will 'deepen the crisis'.
Interestingly they te World Bank also suggest that governments like Australia should "create a "vulnerability fund" and to set aside a fraction of what they spend on stimulating their own economies to help others.
After all that dastardly news the positive spin is whilst most of the major OECD nations are officially in recession Australia has the lowest negative growth.

Yr 12 Legal - International Crime and the Holocaust

The visit today to the Sydney Jewish Museum brought back to me the importance of ordinary people taking action. Making sure that despite what the Professor said "we don't learn lessons from history" that when a opportunity presents itself we do not idly sit back and watch.


An interesting sidenote is the Vasiljkovic case where the first successful extradition of a person living in Australia may occur. A lack of political will has meant that previous war criminals in Australia have escaped punishment and may have even been protected by ASIO according to historian Mark Aarons.

In the recent SMH article Fergus Hanson says "Australia draws an odd distinction between suspected war criminals living outside Australia and those living within our borders. Australia is wholehearted in its effort to bring external war criminals to justice.

Despite resistance in some quarters, we became a member of the International Criminal Court in 2002 and last year we gave $15 million to various international criminal courts and tribunals." SMH 11/02/09

What this case highlights is that international law is highly difficult to enforce and thus largely ineffective without the strong will of politicians who may criticise others yet be weak in their own backyards. The Rome Statute setting up the the ICC was signed in 1998, Australia did not become a member for another 4 years??

For those of you who are interested in further reading about recent international issues see;
Cambodia (Feb '09)
Rwanda (Feb '09)
the Former Yugoslavia (July '08)


"the only thing necessary for the triumph of evil is for good men (and women) to do nothing" Edmund Burke.

Year 12 Eco

On the 27th of February signed the AANZFTA with the 10 members of ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Mynamar, Philippines, Singapore, Thailand, Vietnam). It is Austrlaia's first regional FTA and there will be significant reduction in protection for agriculture, services, chemicals and electrical goods.

Interestingly "With the car industry, Mr Crean said there had been tough negotiations and Australia would eliminate tariffs for all ASEAN nations. “But there will be slower phase-out arrangements for tariffs on vehicles manufactured in Indonesia, Malaysia and Thailand as Australia demanded reciprocal arrangements with those countries,” he said.

Mr Crean said some of these higher car tariff schedules could be addressed in bilateral FTAs.

“I am pleased to say the agreement will achieve very significant tariff cuts on automotive parts and components,”
This means the noodle bowl of FTAs and regionalism continues where despite a regional FTA not all aspects are covered and individual negiotions are needed to gain concessions on key aspects like the automative industry.

If you would like to read more on the noodle bowl syndrome then take a look at this paper no. 7 from the Asian Development Bank.

Intro

This site will have assorted info, links and work for students to catch up with if they have been away. If you have any ideas or links to good sites send them through for me to take a look.