Smoot Hawley in disguise?

Is the ETS/cap & trade going to end up being a version of Smoot Hawley?

I didn’t think this until recently when I was speaking to friend involved in mining. He explained that the ETS will have the effect of taxing exports and despite industry groups pointing this out at numerous meetings the government feels it can’t back down from the election commitment it made otherwise it would incur scorn from the Green groups.

Incredibly this push towards fewer emissions through the ETS could end up encouraging marginal mining to become competitive elsewhere in the world perversely having ZERO effect on global emissions.

Meanwhile the Congressional reps have passed a bill containing provisions to tax imports declared to be carbon intensive from countries deemed lax in taxing carbon emissions under the various provisions of the act.  Everyone’s antennae should be raised as this could be a cover for protectionism under the guise of eco-taxes and we end up with the big players beginning to tax each others exports and we end up in Dante’s  Inferno. The Congressional Reps are not exactly known as big free trade supporters even in boom times.

The recent US/China discussions in preparation for the Copenhagen round went as well as you’d expect. It didn’t. They were so wide apart it isn’t funny and unless this was just political posturing on their part the chances of reaching some sort of workable agreement in December is zero.

I guess our resolve to set an example to the rest of the world doesn’t appear to have been a resounding success at this meeting. I tried and tried but I couldn’t imagine either of the two sides at the bi-lateral meeting saying “ look we have to reach an agreement because Australia is putting forward an ETS”. Somehow I couldn’t see it happening☺ Next time someone says we need to do the ETS  in order to set an example we should ask them how Europe’s “ example” has been fairing in turning heads as they have been busily appearing to set movable targets for about a decade now. How’s that “ example been working out?

Cap and trade could really end up being Smoot Hawley in drag?

Ruddweb : does it even make sense from a commercial stand point?

I tried to crank up a few figures over at Catallaxy and since then I think I have finessed the overall cost and expected return. I’d be happy to hear what other people think and if any of my assumptions are too generous, too skimpy out of whack

I’m take Rudd at his word that in fact they will try to sell the network after a period of time so I’m assuming it’s supposed to be a commercially and economically based proposal.

Rudd has said the total cost of the project will be $43 billion of which I believe after reading a few contradictory pieces, the original promise of $4.8 billion that was supposed to be used  to sweeten the winning bid will be the equity portion of this new deal used to anchor the project.

I have avoided discount cash flow projections because I can’t be bothered as today’s Dollar will suffice.

Total cost of the project is $43 billion
Total borrowing cost on $38.3 assuming a 6% interest
coupon on the bonds issued                                                                                      2.3 billion

Estimated operation costs                                                                                         1.5 billion

Depreciation: 20% per year based on the standard depreciation
allowance for high tech equipment. I have also assumed that
$15 billion of the costs represents cap ex.                                                                    3  billion

Estimated minimum return based on the sales to net profit
margin lifted from Telstra’s projected earnings in 2010 which
are around 20%                                                                                                      1.7 billion

Sales needed to meet these objectives                                                                 $8.5 billion

The planned project has to make $8.5 billion in sales to reach some sort of commercial viability. I honestly can’t see how this project could even be considered viable. In fact the only way it can is that they will allow the project to cannibalize sales in the private sector obviously ably assisted through legislative fiat.

Telstra has said it could provide an identical service at 100 Mbps to 2.7 million customers simply by reworking the current Foxtel cable  at a third of the price. I bet that will be legislated out as a possibility or hamstrung through regulation.

Judging from these numbers the country will end up with a huge albatross that is way over-extended in terms of our needs and can only be supported through laws that restrict current entrants from competing.

This is going to be a wholesale provider so the expenditure (without even taking into account the retailers margin) will be around $425 per man woman and child at the wholesale level.

Another useful project that will only lower our living standards

True Lies and Tim Lambert.

Tim Lambert has posted one of his usual poorly written, incoherent hit pieces about Australian groups attending the Heartland conference on AGW. The obsessive compulsive is obviously against anyone attending.

Down the list of participants he refers to John Humphreys and the ALS saying:

Australian Libertarian Society. Basically this is John Humphreys, whose response to any disagreement is to accuse you of lying. True to form, when I commented on his post, Humphreys accused me of lying, though this time he also deleted most of my comments as well.

Err, as I recall John deleted Lambert’s comments because he was unnecessarily abusive to him.

Continue reading

Bank Late fees take on new meaning.

If you’ve ever dealt with US bank’s call centre you know this story would be true.

A lady died this past January, and Citibank billed her for February and March for their annual service charges on her credit card, and added late fees and interest on the monthly charge. The balance had been $0.00 when she died, but now somewhere around $60.00. A family member placed a call to Citibank. Here is the exchange :

Family Member: ‘I am calling to tell you she died back in January.’

Citibank: ‘The account was never closed and the late fees and charges still apply.’

Family Member: ‘Maybe, you should turn it over to collections.’

Citibank: ‘Since it is two months past due, it already has been.’

Family Member: ‘So, what will they do when they find out she is dead?’

Citibank: ‘Either report her account to frauds division or report her to the credit bureau, maybe both!’

Family Member: ‘Do you think God will be mad at her?’

Citibank: ‘Excuse me?’

Family Member: ‘Did you just get what I was telling you – the part about her being dead?’

Citibank: ‘Sir, you’ll have to speak to my supervisor.’

Supervisor gets on the phone:

Family Member: ‘I’m calling to tell you, she died back in January with a $0 balance.’

Citibank: ‘The account was never closed and late fees and charges still apply.’

Family Member: ‘You mean you want to collect from her estate?’

Citibank: (Stammer) ‘Are you her lawyer?’

Family Member: ‘No, I’m her great nephew.’ (Lawyer info was given)

Citibank: ‘Could you fax us a certificate of death?’

Family Member: ‘Sure.’ (Fax number was given )

After they get the fax :

Citibank: ‘Our system just isn’t setup for death. I don’t know what more I can do to help.’

Family Member: ‘Well, if you figure it out, great! If not, you could just keep billing her. She won’t care.’

Citibank: ‘Well, the late fees and charges will still apply.’

(What is wrong with these people?!?)

Family Member: ‘Would you like her new billing address?’

Citibank: ‘That might help…’

Family Member: ‘ Odessa Memorial Cemetery , Highway 129, Plot Number 69.’

Citibank: ‘Sir, that’s a cemetery!’

Family Member: ‘And what do you do with dead people on your planet???’

Henry Ergas on Rudd’s Social Democratic model

Henry Ergas on Rudd’s social democratic demolition model.

Sinclair Davidson at Catallaxy is linking to Henry’s piece on Rudd’s essay.

Well worth a read.

And The Onion does a panel show on whether kid’s are getting taught the basics of survival in the coming depression. I’m thinking that the ABC’s Q&A weekly show ought to be set up like that. In this week’s program they had a panelist singing the praises of the Luddites. I kid you not. That’s how far our ABC is taking us.

The Mark Andreessen Interview on Charlie Rose

Mark Andreessen is a remarkable person. At a young age he helped develop the web browser, which in reality was the start of the Internet age (Al Gore couldn’t take credit for that as Mark is still alive and kicking).

Since Netscape he’s set up a number of other companies and he ‘s now starting up a venture capital fund with a former colleague to look for opportunities.

Recently he was on the Charlie Rose Show (America’s PBS ) talking about all sorts of things like the future of newspapers (he says none at all for the print version) and all the new gizmos coming out.

The interview is a little long, but it really worth watching.