World Economy a Huge Casino

The existing world order constitutes a system of plundering and exploitation like no other in history. Thus, the people believe less and less in statements and promises. The prestige of the international financial institutions rates less than zero. The world economy is today a huge casino... For every dollar that goes into trade, over one hundred end up in speculative operations completely disconnected from the real economy. As a result...  over 75% of the world population lives in underdevelopment and extreme poverty. The once narrowing gap is widening...  the assets of the three wealthiest persons in the world amount to the GDP of the 48 poorest countries combined. [Speech by Fidel Castro, President of the Republic of Cuba, at the Conference on Financing for Development,  Monterrey, 21.3.02]

Fairplay, Free Markets, and Conspiring Company Bosses

Investigators are raiding companies' offices all over Europe these days. Their quarry is not terrorists or their money, but conspiring company bosses. And the crime they are fighting is price fixing. Many theorists will tell you that price-fixing conspiracies fall apart under the pressure of market forces - which is usually true in the long run. In the meantime, the cost of collusion can be enormous. Price fixers harm the entire economy. Consumers have to pay more for goods and services and get less choice. Price fixing  also undermines faith in the benefits of markets, such as it is. [The Economist, 20.4.02]

The Australian Competition and Consumer Commission (ACCC) raided the offices of the nation's major oil companies in the wake of serious allegations about price collusion. About 90 lawyers, investigators and information technology specialists entered 10 buildings in Sydney and Melbourne, carrying away a mass of documents and computer records, kept by Caltex, Mobil and Shell. The Chairman of the Commission, Professor Alan Fels, described the raids as the biggest since the Commission was established in 1974. Fels said his office had been provided with serious material supporting allegations of petrol price fixing...  None of the oil companies sought to challenge the ACCC's action. The number of petrol stations has shrunk from 22,000 to 8,000 in twenty years. Thousands more are set to disappear if the industry is not reformed. [Daniel Lewis, SMH 24.4.02]

The Good Oil? - continued

Years of policy neglect, stiff national and international competition, and a repeated refusal by the ACCC to allow any industry consolidation has left the four refining companies ­ Shell, BP, Caltex and Exxon Mobil ­ in poor financial shape...  Overall losses last year were $160 million...  The executive director of the Australian Institute of Petroleum said that severe competition is faced from more modern Asian refineries...  At least one and probably two Australian refineries will have to close.[Ian Howarth, AFR 26.4.02]

Anonymous Capitalism, or Who Will Name the Nominees?

Nominee companies dominate the top 20 shareholders of Australia's major companies. A good example is that the top four positions in BHP, the Commonwealth Bank, and the AMP are  held by Chase Nominees, Westpac Nominees, and Citicorp Nominees. The Nominee Company may be holding the title to the assets on behalf of major state or public superannuation funds, or industry funds. It may also be operating for foreign interests. Other investors may use nominee funds if they wish to quickly build stakes in companies. But the listed company does not have to remain in the dark whilst predators are building positions. It has the right under corporation law to discover the beneficial owners of shares being acquired, but individual investors do not have the same rights. US investors can readily obtain a list of the top institutional shareholders in their companies. But Australian investors have to monitor the internet chat rooms, scan the financial media, and keep a close relationship with brokers if they are to know the shareholding machinations of their listed investments.[Craig James, AFR 26.4.02]

A Documentary Process?

The board of the national law firm, Clayton Utz, has launched a sweeping internal review following damning findings by a Victorian Supreme Court nudge, in the British-American Tobacco document-shredding case. The firm's chief executive partner, David Fagan, said any adverse findings could result in stern action. One of the judge's findings was that the firm devised a strategy for destroying documents...  The appeal process may take over a year. [Bill Pheasant, AFR 24.4.02]

Tobacco and Mass Destruction

Rolah McCabe of Melbourne, dying from lung cancer, sued the British American Australian Services, a subsidiary of the second largest biggest tobacco manufacturer in the world. Justice Eames found thousands of documents had been destroyed ­ he called it "mass destruction". She was awarded $700,000 damages. [William Birnbauer, SMH  12.4.02]
 The judge determined that the destruction of documents had denied Mrs McCabe a fair trial. So he struck out BAT's defence. All that was left for the jury was to determine damages against BAT. Word of the document shredding spread through the media... .it was simply the biggest legal scandal of the decade...  The 700,000 damages will help her family, but in terms of punishment it will mean nothing to BAT. But the damage to its reputation and its lawyers is likely to be measured in millions of dollars.[Michael Cave & Katherine Towers, AFR 13.4.02]

Crooked Corporations Going Up in Smoke?

The Australian tobacco industry faces a claim of over $360million for illegally pocketing taxes levied on the nation's smokers...  Up to 19,000 retailers will demand that the money, intended for state government coffers, be returned to them. The British American Tobacco Company, still reeling over a successful $710,000 damages claim by Rolah McCabe, will be sued for failing to repay licence fees collected from retailers in a five week period in 1997.[Richard Yallop & Benjamin Haslem, SMH 13.4.02]

Drugs  Too Concentrated?

The Australian Competition and Consumer Commission (ACCC) said that the projected merger of Sigma Co and Australian Pharmaceutical industries could not go ahead because the new company would have too much market power. Pharmacists already relied on only three full-line pharmaceutical wholesalers as primary suppliers. The planned merger would leave only two. Professor Fels, chairman of the Commission, said that it had turned up substantial concerns from wholesalers, pharmacists, manufacturers, industry groups, and government agencies. The high costs of entering markets and existing selling arrangements were obstacles to new entrants to the drug market. [Richard Salmons, SMH 18.4.02]

Are All Banks Bastards?

For years the banks have suffered in their role as public enemy no.1. Their profit improvements parallel the rise in public discontent at service levels and branch closures. All the banks are acutely aware of how damaging the industry's image is...  NAB's decision to cut 56 rural branches and sack over 2000 staff runs against the industry's general move to improve its public relations. [Elizabeth Knight, SMH 12.4.02]

The Banking Club

`The chief executive officer of the ANZ Bank, John McFarlane, said the banks were all members of a club. He was commenting on his bank's offer to acquire the 56 branches planned for closure by the National Australia Bank. "Whatever we do individually affects al members of the club, which is not in great shape at the moment", he said. [Jason Clout, AFR 15.4.02]

Australian Banks Outperform Wall Street

Australian banks have been the consistent stars; total returns delivered 24% over the year, or four times the rest of the market, and a gain of over 6% this year. [Chanticleer, AFR 26.4.02]

Keeping Warm by Burning the Floorboards

We are wealthier, healthier, better housed and educated, but it is coming at the expense of the environment. These findings give the lie to the line we constantly get from politicians and economists, that we need strong economic growth so we can afford to spend more on fixing the environment. The point is that the economy cannot be separated from the environment...  our present mode of economic operation is unsustainable. We are keeping warm by burning the floorboards. [Ross Gittins, SMH 24.4.02]

Winner Take All Society

In Australia we are lurching towards Americanising our economy, embracing what the US sociologist Richard Sennett calls the "new capitalism"...  In this "winner take all society", executives are bestowed with astronomic salaries...  Losers are humiliated by the charge of parasitism...   In the new TV games there is not even honour among thieves... The path to victory is via betrayal, forming short term alliances before shafting former allies... Each week players face the threat of expulsion. Self-interest is pursued shamelessly. Hence the title of Sennett's new book, The Corrosion of Character. [Anne Manne, SMH 24.4.02]

Local Finance Market Taken Over?

Australia's finance companies face a difficult time as global players seek to dominate the local market. Westpac is selling its consumer and commercial finance arm to GE of the USA...  The new combined entity would dominate the market for store cards and store finance. A survey by KPMG suggests that the remaining "players" face an uphill battle to find their place in the most competitive sectors.[Anthony Hughes, SMH 23.4.02]
 
 

Old Professionalism Gives Way to Self-Interest

Huge professional service firms with enormous overheads are now much more beholden to big clients. Self-interest and professional duty frequently clash...  The old professionalism, by which law firms used to distinguish themselves from the rest of commerce, has given way to hard-bitten business practice. [Richard Ackland, SMH 26.4.02]

The Rich Get Richer and the Middle Class Gets Squeezed

The latest study of what has been happening to Australia's wealth has been conducted by Simon Kelly, of the National Centre for Social and Economic Modelling, at the University of Canberra. He finds that over the 12 years to 1998 the total net wealth of all Australian families almost trebled ­ an average growth of 8.6% p.a.  The number of millionaires rose from 20,000 to 180,000. Two fifths of this came from the increase in value of homes. Over a quarter came from the increase in superannuation balances, and one fifth came from an increase in investments. The poor have been getting a fraction richer, the richest of the rich have been getting still richer, and the middle has been getting squeezed...  The introduction of compulsory superannuation was one of the significant factors working to prevent a further widening of the wealth gap between rich and poor. [Ross Gittins, SMH 17.4.02]

To Those That Have Shall Be Given...

The income gap widens, as wages and salaries at the top end continue to outpace those of lower skilled occupations, according to Mark Cole of the Centre for Industrial Relations and Training. He said wages for higher skilled occupations had increased by 3.5% over the last four years, compared with 2.8% for lower skilled workers. [Joyce Moullakis, AFR19.4.02]

A Voice For Workers in the Workplace?

Increased support for institutions such as works councils is a recognition that value creation is an essentially social process, and that organisational sustainability depends on depends on legitimate social governance. Perhaps we should recognise that the time has come for new institutions to create a new type of work place? [Paul J. Gollan, lecturer in the Department of Industrial Relations at the London School of Economics, AFR 26.4.02]

Price-Fixing Executives Deserve Jail

The chairman of the Australian Competition and Consumers Commission, Allan Fels, said that  "secret price-fixing collusion that constitutes a theft against the public should be subject to criminal sanctions"...  Speaking in Melbourne, Professor Fels pushed hard for much tougher sanctions against companies and their executives caught fixing prices. He said:
 It is a form of theft, a form of fraud comparable to other white collar
 crimes that have criminal penalties attached to them. The Commission
 thinks you need the fear in the minds of big business executives that
 they could go to jail for collusion for this law to work properly.
[Laura Tingle, SMH 25.4.02]

Who Shall Account for the Accountants?

The accounting industry has called for a radical overhaul of Australia's financial reporting framework, including quarterly reporting by big companies and an ombudsman to monitor the profession. The proposals were made by the accounting professional association, CPA Australia...  Its chief executive officer, Greg Larsen, said his blueprint was triggered by recent corporate collapses which had undermined public confidence in financial reporting standards. [Fiona Buffini, AFR 19.4.02]

For the Rich Shall Always Be With You

According to OECD figures the number of wealthy people in the world (those with over US$1 million, in liquid assets) has risen to 7.2 million in the past three years. This is an increase of two million since 1998...   In Australia 150 families are estimated to hold $50 million or more in investible assets. According to the Commonwealth Bank, Australia now has 225,000 millionaires, up from 71,700 in 1993. Wealth continues to be very unevenly distributed, with the wealthiest 10% accounting for 50% of the total, and the top 1% accounting for 15%. The general manager of Westpac, Peter Hanlon, said the vast majority of Australian investors fall into the mass affluent category ­ 24% of the adult population is considered to be "mass affluent" (incomes of $50,000 to $90,000 p.a.), and accounts for 45% of personal investment. [Elizabeth King, AFR Magazine 28.4.02]

Not Very Trustworthy?

The Federal Government's main advisory body on taxation is considering new measures to crack down on the abuse of trusts by the rich. One proposed approach would prevent high-worth individuals and their families from using trust arrangements to avoid tax by revaluing assets, and then distributing cash profits to beneficiaries. The board's chairman, Dick Warburton, said they were trying to determine how the abuse could be stopped. He said the use of trusts has become part of the fabric of Australian life, and the more we look at it, the more it's like trying to cut a growth out of a brain... how do you get it out without harming the brain? [AFR 28.4.02]

The Power Elite

Who are the people with near-automatic entrée to positions of power? Who just come recommended, never get interviewed, with credentials which are never questioned? The answer is former chief executives, high-ranking accountants, lawyers, and merchant bankers...  The real reason that they get chosen is safety. Boards believe that they can't function effectively if there are major disagreements...  But there are boards where the members know each other too well and there is insufficient  questioning and debate...  Of the major players in Australian boardrooms, most seem to have been a party to sanctioning major corporate blunders...  There are serious legal responsibilities associated with board members, but they have not been properly tested. [Elizabeth Knight, SMH 19.4.02]

Power is Located in the Interstices of Procedure

Many so-called stock market analysts are merely marketing tools for investment bankers, spouting lofty ideals about independence while carefully cultivating relationships with companies by issuing friendly research, and hoping for a pay-off in the form of advisory work...  Analysts often think one thing, but tell clients the opposite...  We are talking about the bilking of the investing public to the tune of billions of dollars...  Many doubt much will change. Companies and investment banks have a vested interest in telling a good story...  Few analysts are prepared to speak their mind for fear of reprisals from the executives on whom they rely for information. ["The truth about Wall Street", by Luke Collins in New York, in AFR 13.4.02]

Substantial, Sustained, and Secret

A cartel of corporate executives that fixed prices to supply billions of dollars worth of equipment to the power industry was fined almost $15 million by the Federal Court. The price-fixing ring pushed up the prices, holding secret meetings at exclusive hotels and private homes. The chairman of the Competition and Consumer Commission, Allan Fels said: "This was substantial, sustained, secret, senior level collusion affecting Australian consumers everywhere".  He said fines alone are not sufficient ­ the possibility of a jail sentence for price fixing concentrates the mind of business people much better. [Matt Wade, SMH 4.5.02]

 The High Cost of Price Fixing

Alfred Taubman, the former chairman of the English auction house Sotheby's has been sentenced by a US District Court Judge to a year in prison, and fined $13.9 million for his role in a price-fixing scheme. He was found to have conspired with the former chairman of Christies' to fix auction fees over six years. The scheme is said to have cost the auction house's sellers $US 43.8 million over six years. The judge said Taubman had neither acknowledged personal responsibility nor shown any remorse. His lawyer said that Taubman suffered from diabetes and sleep apnea, and took 26 pills daily. This meant prison time was a life sentence.[Luke Collins, AFR 24.4.02]

Insurance

This is an industry with a long tradition of squandering capital on underwriting and engaging in wild price wars whenever investment markets are booming and bolstering profits.  When the investment returns disappear... there is an "insurance crisis", as is the case now. There have been 12 mergers and acquisitions in the past month, and the collapse of HIH Insurance, the second largest general insurer. [Alan Kohler, AFR 27.4.02]

A Multiplexity of Funds?

Multiplex Contractors, one of Australia's biggest building companies, pocketed $200,000 a year by investing funds intended for subcontractors on the short term money market, according to its general manager in Queensland, in a submission to the Cole royal commission of inquiry into the building industry. The company usually made about $200,000 a year from this practice, he said. [AFR 19.4.02]

Keep Your Own Council?

The NSW Independent Commission Against Corruption (NICAC) has been told that councillors and staff at a southern Sydney council solicited hundreds of thousands of dollars from developers to assist building applications. Counsel assisting the Commission, Greg Farmer, said extensive electronic surveillance had been used in a long running investigation into activities of a number of councillors, developers and their go-betweens operating in Rockdale. He said that a disturbing picture of greed, self-interest and undue influence had emerged. [A.A.P. in AFR 2.5.02]

Qantas Attacks Competition & Consumer Commission (ACCC)

Qantas chief executive, Geoff Dixon, called on the Government to overhaul the watchdog's investigation procedures, to prevent  unfairly damaging companies' reputations...  Professor Fels, the ACCC chairman, rejected the criticism, saying the public knows the difference between an investigation, an allegation, and a court verdict of unlawful behaviour. Dixon also continued his campaign for the removal of foreign ownership restrictions on Qantas, to allow it to raise capital overseas. [Jane Boyle, AFR 2.5.02]

Do-It-Yourself Banking?

The cause of bank branch closures throughout Australia is the revolutionary change from banking being a labour intensive corner-store personal service business into a supermarket self-serve industry.  ... if customers are to get the full benefit from even greater improvements and efficiencies in banking practices, there will have to be a lot more branch closures, in both metropolitan and rural areas. In the last three years one in five branches or agencies has been closed. [Michael Baume, AFR 29.4.02]

Borrow and Be Damned!

Australia's banks and non-bank financial institutions are responsible for 60% of Australia's stock of net foreign debt. This is up from about 35% in the late 1990s. New research by the Reserve Bank and the International Monetary Fund suggests that foreign borrowing can damage economic growth. But local economists say the big increase in foreign debt is not doing Australia any harm. [Cherelle Murphy, AFR 29.4.02]

There is No Escape... Bankers Become Unemployed

A growing number of investment professionals are unemployed, marking the end of a jobs boom fuelled by new entrants to the Australian market. The number of corporate bankers has been slashed over the past yearv Deutsche Bank is likely to cut 6,000 jobs globally. [Alison Kahler, "Investment professionals join the jobless", in AFR 29.4.02]

Top Executives and Top Pay

With half of all adult Australians now owning shares indirectly through investments made on their behalf by superannuation funds, many of us now have a stake in the performance and payrolls of public companies. Payments to the top five executives in every public company must now be listed in annual reports...  Last year, chief executives of our top 150 corporations earned an average of $1.3 million ­ making our executives the third highest paid in the world after the US and the UK. (The average annual wage is $40,000.)   Professor Spillane, of the Graduate School of Management, thinks the biggest change of all has been the Americanisation of business and Australian life generally...  Our values have shifted from British to American, and globalisation is partly to do with that.  More than ever, CEOs live and die by the bottom line. "The financial markets couldn't care what these people are paid ­ they just want results...  The really top performers can add billions to market capitalisation, so the fact that they may get paid some millions of dollars becomes irrelevant". [Miriam Cosic, "Chief Executive Overkill", in Weekend Australian Magazine April 27-8, 02]

Universities Bankrupt?

According to the latest Federal Government's report on universities, over a quarter do not have enough money to make ends meet. Revenue growth is limited but costs are not. Regional universities are the ones in most difficulties ­ ten of them are recording losses; revenue growth is limited and general costs are increasing. [Gerard Noonan & Aban Contractor, SMH 15.4.02]

Does More Mean Worse?

Ten of the nation's 38 universities operate at a loss ­ five more than the year before. This is despite the fillip to university finances from the strong growth in full-fee paying students (mainly from overseas)...  The staff/student ratio has fallen from 1:12.9 in 1990 to 1:18.8 over the last decade. [SMH 18.4.02]

New or Old Universities?

Academic staff are gradually growing older...  when they retire, many are not replaced...  The drift of "new" universities away from traditional disciplines and towards vocational study has occurred without any serious discussion...  There is an almost complete collapse of any shared understanding of what a university is and what it is not.  Some of this is due to John Dawkins, education minister in the Hawke  government. He created from the so-called "binary" system of education a supposedly unitary system, centred on universities. This "amalgamation" of universities and vocational colleges destroyed the idea that universities had any special character. In recent years the binary system has been founded on a distinction between the group of seven elite universities, and the thirty or so newer ones...  This involves an attempt by the older universities to create a sort of Ivy League in Australia, concentrating high level research in their own hand...  Whether this is in the best interest of Australia is the most important question of the contemporary university debate.[Robert Manne, Associate Professor  at La Trobe University, in SMH 15.4.02]

Screwing the Universities

Our universities boast cumbersome and inefficient administrations, non-productive researchers, lazy and selfish teachers. Students don't study sufficiently hard or fast and they don't pay anything like enough for the privilege. Public higher education institutions are governed and led by incompetent, unprofessional councils and senior managers: none of our universities is world class. This is the unflattering picture the Federal Education Minister, Brendan Nelson, paints. And clearly his paper, Higher Education at the Crossroads, will influence the international reputation of Australian universities... Despite the insistence that this is no more than a floating of ideas, Nelson's paper contains a definite agenda to wring yet more from a system that is already a mere shadow of its former self... Nelson wants to raise fees; students to pay the full cost for anything beyond an undergraduate qualification; students to learn faster as universities operate around the clock every day of the week; and academic staff to work extra shifts for miserable pay rises. [Academic salaries have dropped 25% in real terms over 10 years.]  [Senator Kim Carr, Opposition Spokesman for science and research, in SMH,   1.5.02]

Part-Time Economy?

Over the past five years part-time employment increased by over a fifth, while full-time jobs increased by only one twentieth...  In the public sector 48% are unionised; in the private sector only 19%...  The trade union movement represents nearly half the people working for government, with only a minor role in representing workers against private employers. This is a strange twist in the originally conceived role of the movement. [Alan Moran, of the Institute of Public Affairs, AFR 27.4.02]

Time for Labor to Come Out of the Shadows and Be a Real Party Again

Labor needed to become a real reformist party again, and build bridges to new constituencies of "free agents", or it would face a further prolonged period in the wilderness, according to Mark Latham, assistant shadow treasurer. He said that a timid political strategy since it lost power in 1996 was the cause of the identity crisis. It was time to consign the "small strategy target to the dustbin of history", he said, and become "bold, creative and reformist". [Tony Walker, AFR 2.5.02]

Has the American Empire Peaked?

The key element of capitalism is change as it strives to accumulate. In the USA a dynamic and expansionary form developed, leading to an ever growing US Empire, with its core a military-industrial and finance capitalism. With the collapse of the Russian Empire, the emergence of Chinese power, a unified Europe and a subservient Japan, the USA stands as the undisputed world super-power. The question is whether this is the peak of the US Empire? Three areas need to be examined: (i) the internal contradictions of the US  (ii) the possibility of rival powers developing, and (iii) whether the victims of US power can disrupt the status quo. [Abe David, D.R.Asia Project Partners]

The "Dark Side" of Uncle Sam

The policies of Washington... reflect the ruthlessness of corporate America, which treats other lands according to their rating: market, mine, sweatshop, or basket case. Uncle Sam's rapaciousness is both driven and disguised by a mix of pop culture, mass media, brand fetishism and propaganda so clever and tantalising that most of us feel the sooner we are indoctrinated into the American dream, the better...  Bush's "new kind" of war in the name of freedom is actually an old kind of imperial excursion to extend America's grip on the wealth of the world. [Richard Neville, Good Weekend, 13.4.02]

Not Very Reserved?

Alan Greenspan, Federal Chairman of the US Federal Reserve Bank, averaged 96 private meetings a year with politicians in his first three years of office, and 141 p.a. in the next three years. Ken Thomas of the Wharton School, who discovered this, argues that this extent of undisclosed political contact is harmful to the perceived independence of a central bank. [Peter Hartcher, AFR 19.4.02]

New York Attorney General, Eliot Spitzer, Throws a Bomb into the Heart of the Investment Banking World

He scored a direct hit on Merrill Lynch when he obtained a court order requiring the firm to disclose conflicts of interest between its research and investment banking businesses. He accused it of distorting its stock recommendations to get investment banking deals. A ten month investigation has unearthed a series of shocking emails  relating to the motivations for stock recommendations...  At the heart of this concern is that investment banks may be biased towards shares in companies from whom they receive corporate advisory fees. [Elizabeth Knight, SMH 10.4.02]

Hedge Funds Fighting for their Good Name

Over 6,000 hedge funds vie for business world-wide, managing $500 billion. Yet their reputation does not improve. Ever since the near collapse of Long-Term Capital Management in 1998, hedge funds have blundered, blown up, or defrauded their investors at fairly regular intervals. The latest mess is the collapse in New York, with $325 million in losses...  Thanks to the industry's opaqueness, with most set up offshore, it attracts unsavoury characters...  Michael Berger, for example, is still on the run after his Manhattan Investment Funds blew up in 2000. [The Economist  13.4.02]

Insecure Research?

The inquiry into brokerage research in the USA continues to heat up, as the Securities and Exchange Commission asked ten big Wall Street firms to hand over information about their research practices...  These requests show that Wall Street's "top cop" has begun to mount an aggressive probe into the securities industry. A key element of the probe into Merrill Lynch, for example, shows that company executives often had private doubts about companies receiving high ratings from the firm. Charges of misleading investors may be filed. [Charles Gasparino, AFR 2.5.02]

Market Farces?

Markets fool most of the people most of the time, according to American fund manager Dave Martin. He says that almost every time the markets change, something different fools you. The reason, he muses, is that markets are trying to discount future probabilities, without knowing what other possibilities can occur...  He says there is a small probability of another substantial terrorist attack which is almost certainly  weighing down the markets...  they will turn when rises outnumber falls by three to one, and the volume of rising stocks outnumbers that on falling stocks by nine to one. [Barry Dunstan, AFR 15.4.02]

The "National" Farce

 Seven "nations" have refused to cooperate with the OECD in its bid to stem taxation crime. They are Andorra, Liechtenstein, Liberia, Monaco, the Marshall Islands, Nauru and Vanuatu. Up to $US 70 billion in Russian Mafia money has been laundered through Nauru, according to the Russian Central Bank. The OECD's deputy secretary, Sejichi Kondo, said governments had a duty to protect the interests of honest tax payers in the face of those using tax havens to avoid their legal obligations. [Allesandro Fabro, AFR 22.4.02]

Trend Towards Milder Recessions?

A study just published by the International Monetary Fund (IMF) has shot holes through the conventional wisdom about recessions...  It says that they are fairly unusual but the IMF says they are rather the rule than the exception...    The most recent global downturn has more in common with previous ones than is generally supposed. The special feature of the IMF study is that it covers the experience of 21 countries over  28 years...  Economic cycles have lasted six years...  the average recession is about one year and output falls about 3%. Recoveries last longer than recessions... there is a long term trend towards milder recessions. [Alan Mitchell, AFR 13.4.02]

Global Recovery?

The World Trade Organisation (WTO) said the emerging global recovery would help international trade grow 1% this year, reversing the worst trade slump in 20 years. A recovery in demand is under way in Western Europe and the USA, and consumption and investment is growing again, it said in its annual report. But prospects for Japan are still bleak. It warned that stronger rebound in trade was unlikely because of only moderate output gains in major markets, and the sober outlook for the technology sectors...  The main factors operating were the meltdown in the global technology sector, weak demand in Europe and the fall-out from the September 11 terrorist attacks, it said.[ Brendan Pearson, AFR  3.5.02]

Vatican Sued Over Child Sex Abuse

In Australia, Ireland and Canada victims of sexually abusive priests often speak of wanting an apology. In the USA victims want and get huge sums of money. The crisis in the Catholic Church in the USA is providing  steady employment for a growing number of lawyers seeking to specialise in this new lucrative area. In Texas the diocese of Dallas  has paid out $31 million to 11 plaintiffs. In New Mexico, the diocese of Santa Fe paid $50 million to victims after 20 priests were removed from duties. Nobody has ever successfully sued the Vatican ­ yet.[Caroline Overington, SMH 6.4.02]
 Claims of sexual abuse by officials is costing billions of dollars to settle, and the church may be forced to sell land and other assets to pay claims...  A groundswell is building for reforms, including the ordination of women, and more financial disclosure. [William C. Symonds, AFR 8.4.02]

The Decay of Market Power

The decay of market power now under way creates a new set of conditions for which mainstream opinion is ill-prepared. Politicians on both left and right have succumbed to the illusion that globalisation is leading the world into an era of peace and plenty, in which the state will play a diminished part. The reality is almost the opposite. Unchecked  globalisation results in a semi-anarchic environment that threatens even the strongest states. In a natural and inevitable counter-movement, we are entering a new era of state power. [John Gray, professor of European thought, LSE, New Statesman, in AFR  10.5.02]