Stop Internet Censorship in Australia

The Australian Labor Party Senator Stephen Conroy, Minister for Broadband, Communications and the Digital Economy, has put together a plan to censor all Internet traffic in Australia with the stated intention of protecting children from pornography and blocking “illegal material”.

It is my opinion that this plan is completely unnecessary and serves merely as a distraction from the real issues affecting our country at this point in time. It is also a huge waste of money, with $44 million being budgeted in this financial year alone, with more to be spent in the following years.

The are a number of readily available options available today to concerned parents. These include PC software packages, routers with in-built filtering, and Internet Service Providers who offer optional filtering services on a per-account basis.

Australians will not be able to opt out of this scheme – we will only be able to choose between a ‘child-friendly’ setting or an ‘illegal content’ setting. What is illegal or child friendly will of course be determined by the government. It has not been discussed how one would get an incorrectly blocked site removed from the list.

The adoption of Conroy’s plan will result in web browsing being slowed considerably due to the overhead of filtering.

Filtering technology is known to be highly ineffective. A recent Tasmanian trial showed that a significant number of innocent pages were falsely blocked, and similarly, a significant number of ‘child unsafe’ pages (1 in 13 clicks) got through.

Apart from the inaccuracy of the filtering, its overall impact is highly limited – it appears that the filter will only be applied to HTTP (web) traffic. P2P networks such as BitTorrent will not be filtered. Even the HTTP filtering can be easily bypassed using any number of off-shore anonymous proxy servers and VPN gateway.

If you don’t want Internet censorship forced upon you, contact your local Federal MP and let them know. If you don’t know who that is, this site should help:

http://apps.aec.gov.au/esearch
 
And if you want to complain to Senator Conroy, here is his contact page:

http://www.aph.gov.au/senate/senators/homepages/senators.asp?id=3L6
 
The following sites are leading the campaign to oppose the filtering scheme and have detailed information:
 
http://nocleanfeed.com/
http://www.somebodythinkofthechildren.com/

Stock Valuations and Kevin Rudd’s $1M Bank Deposit Guarantee

Hello Everyone,

Pardon the sparseness of my posts in the last fortnight. I have been reading and thinking very hard. For me, it is important to try and say something meaningful rather than contribute to the endless media waffle concerning the current financial crisis that does nothing more than waste time and confuse people further.

As first glance, many ASX stocks look incredibly cheap based on historic valuations. There are now heaps of shares that have P/E ratios less than 10, and offer fully-franked dividend yields greater than 10%. These are not just the battered property trusts who have high debt – many of these companies are in other sectors and are still reporting record earnings growth. So why aren’t these companies’ share prices going up?

The reason is that sentiment is very very poor. The market is anticipating future drops in earnings over the next few years as the financial crisis runs its course. People lack accurate, trustworthy information, so they are expecting the worst.

I personally see reasons to be positive. Emerging markets like Brazil, China and India are still growing strongly, and many Australian companies have exposure to these economies. There will still be demand for cheap consumer goods. Plenty of money will still be made in biotechnology and agriculture.

My share portfolio has been battered heavily – I have many small cap stocks which naturally are more volatile and lack liquidity, but they’ve all been paying their dividends like clockwork and most of these dividends are higher than last year. I do not buy shares that do not pay a good dividend – I see the dividend as a mark of business stability and compensation for periods of stagnation.

Right now, I expect the market to see-saw up and down for a prolonged period. I am looking at ways to take advantage of this. One area I am reading up on is the investment technique known as Value Averaging. Most people are familiar with Dollar Cost Averaging, in which one regularly invests a fixed amount of money into a share or managed fund, regardless of the price. 

With Value Averaging you vary the contributed amount depending on the value of your portfolio at the end of each time period, in order to reach a pre-defined target. The end effect is to buy more shares when prices are lower and buy fewer shares when prices are higher. Research has shown Value Averaging to outperform Dollat Cost Averaging about 95% of the time. I plan to write a post on this in the near future. If you can’t wait, click on the above link.

In other news, on the 12th of October, Prime Minister Kevin Rudd surprised everyone by announcing a package to provide an unlimited  guarantee on bank deposits. The financial markets reacted like an agitated grizzly bear hit with a tranquiliser dart – there was a day of temporary euphoria, followed by a swift return to instinctive behaviour.

A week later, Kevin realised that the package may have been overly generous and he announced that the bank deposit guarantee would be limited to $1 million. Beyond this amount, bank account holders would have to pay for insurance.

I question the wisdom of this scheme. Although this may have allayed consumer fears about the solvency of banks, it may have had the unintended side effect of further fuelling an exodus from shares and other asset classes into this newly created ‘perfect safe haven’.

Furthermore, in the event that the financial crisis worsens and a bank does become insolvent, where is the Government going to get the money to meet their guarantee obligations? Probably by printing more money! This will cause increased inflation and devalue everyones’ wealth. Nonetheless, this is probably far more emotionally palatable than going to your bank and being told that your money is gone.

Speaking of inflation, the Australian Bureau of Statistics stated that the Consumer Price Index (CPI) will reach a 13-year high of 5% this year. The current interest rate on Australian bank deposits is around 6%-6.5% per annum, so people who have their money in cash will be treading water.

In contrast, corporate earnings are more resistant to inflation. Assuming that demand remains constant, corporate revenue rises with inflation. For this reason, I see better value in making defensive investments in defensive low-debt stocks than blindly putting money in the bank, unless you need to access your money in the short-term.

The Great Short-Selling Swindle Explained

The recent decisions by major market regulators to reduce market volatility by restricting short-selling have generated much controversy.

Most media coverage has sought to educate the public as to what short-selling is and debate whether the growth of the practice is a cause or merely a symptom of the financial crisis gripping the world. Questions have also been raised as to whether it should be permitted or not.

Despite this, I have not seen anybody attempt to explain how short-selling has been abused in the last year to lead us to the situation we have today.

This article aims to uncover how short-selling has been abused as a tool of market manipulation and deception on the Australian Markets (the ASX). Before continuing, it is essential that you understand the following terms: short-selling, hedge fund, short-position, long-position, margin calls and stop-loss order.

Read more

How to Take Advantage of the First Home Saver Scheme

The Australian Government does not concern itself much with the affairs of young people these days – we have an aging population and the young person’s vote is not considered important, but every now and again, it throws a token gesture their way.

By this, I am talking about the First Home Saver Scheme, which commenced last Wednesday, the 1st October.
Read more

Satirical US Election Campaign Videos

I found these satirical US election propaganda videos earlier today. The first, I’m Voting Republication,  was released by Democrat supporters a while ago. The latest video, I’m Voting Democrat, was released in response by Republican supporters a few days ago.

For those of us outside the USA, we can poke fun at both sides.

The US needs a Bailout, not a Sellout!

Last night, the US Congress correctly rejected the proposed $700 Billion Sellout package for the troubled Financial sector. It is my opinion that American taxpayers simply do not want tax dollars, generated through their own hard work, to be used to absolve greedy financial firms of their irresponsibility and recklessness, without asking for something in return. Anything else would set a bad precedent and allow the problem to recur in the future.

The US Democratic Senator for Ohio, Dennis Kicinich explained his own reasons for rejecting the bailout in an interview with the community media network, Demoracy Now!.

I agree with the need to stabilize the market, but it should be done in a way that is fair to the American public. Just as when a criminal is released on bail, he or she is subject to stringent conditions, so should the corporations being bailed out.

If a corporation wishes to receive some kind of Government assistance, e.g. the Government taking over its bad debts, there is no way that they can be permitted to keep any of the ‘booty’. Possible conditions could include the following:

• NO payouts for executives that choose to resign or retire
• Cancellation of all outstanding stock options issued to executives
• Any stock issued to executives in the last 5 years should be returned to the corporation
• Confiscation of personal assets purchased with bonuses awarded to executives over the last 5 years

This of course should happen independently alongside a comprehensive investigation of all lending and risk management practices with criminal charges laid against those suspected of fraud.

Tribunal Awards $12,500 to Lesbian Women Offended by Anti-Gay Bumper Sticker

The Queensland Anti-Discrimination Tribunal ordered a man named Ron Owen to pay $12,500 in damages to three lesbian women, who lodged a complaint over a bumper sticker displayed on his car.

The bumper sticker read “Gay rights? Under God’s law, the only rights gays have is the right to die.”

I can understand people being offended by the inciteful language on this sticker, but I do not support the awarding of damages to these women, as the message was not directed at them specifically.

In my opinion, the only proper outcome would be an order to remove the bumper sticker, print an apology in a local newspaper and refrain from displaying similar messages in the future.

ASIC Bans all Short Selling in Australia

In a surprise move last night, the Australian Securities and Investments Commission (ASIC) has banned ALL short selling in Australia – both naked short selling and covered short selling. This came as a surprise to many people [including myself] considering their previous statements that expressed their satisfaction with their previous restrictions, which only affected naked short selling.

The ban commences from the start of trading this morning (Monday 22nd September).

In their statement, ASIC expressed concern that short selling bans that have recently been enacted in a number of markets around the world may result in hedge funds moving their activities to Australia and increasing “unwarranted activity” here.

These new restrictions are more extensive than those enacted elsewhere, which have generally only targeted financial stocks.

Short Selling Bans Imposed in UK and USA

In response to the recent unprecedented volatility in the financial markets, the US Securities and Exchange Commission (SEC) and the UK Financial Services Authority (FSA) have both imposed temporary bans on the short selling of financial stocks.

For those not in the know, short selling is the act of selling stock one does not own, with the aim of buying it back at a lower price and profiting from the difference. This strategy is used to make money in a falling market, or when one expects a fall in the near future.

Large hedge funds have been blamed for abusing short selling to manipulate the market and contributing to the deterioration of world stock prices. 

The US ban applies to 799 stocks, and will initially last for 10 days, but may be extended. The UK ban applies to 32 companies and will last until the beginning of January 2009.

In Australia, our own so-called regulator ASIC has stated that we already have restrictions on short selling. Many people would consider this laughable.

I have an article that’s been sitting on the back-burner concerning my opinion of the role of short selling in the world stockmarket turmoil. It will follow next.

Selling Australian Uranium to India

India is upset with Australia because we refuse to sell them Uranium. We currently have a ban on selling Uranium to all countries that have not signed the Nuclear Non-Proliferation Treaty.

Australian reserves hold 30-40% of the World’s Uranium, so this business is very lucrative for the country.

In principle, I support the sale of Uranium to India – they are a rapidly growing economy and they face huge increases in domestic demand for electricity. They are a democracy and I consider them to be a peace-loving people.

I presume that India is hesistant to sign this treaty due to their ongoing disputes with Pakistan, and as a counterbalance to their large nuclear-capable neighbour China.

The NPT is certainly important, but it should not be the only factor in the decision.

Last year, during the APEC summit, former Prime Minister John Howard signed an agreement with Russian President Vladimir Putin to sell Uranium to Russia. Unlike India, Russia is a signatory to the NPT and under the terms, Australian Uranium would not be used for military purposes or exported to third parties.

BUT as other people astutely pointed out – with Australian Uranium, Russia can divert its own domestically produced Uranium to weapons use, and sell it to hostile countries like Iran, whilst keeping within the terms of the NPT. Is this a desirable outcome?

Perhaps we can negotiate some other sort of agreement with India which would commit them to using Australian Uranium purely for nuclear electricity production, with some sort of Australian supervision. If such a thing can be done, this surely would provide a better outcome for all.

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