Friday, September 30, 2011

Latest Qantas strike hits 8500 passengers

SMH.com.au
30/9/2011


Qantas employees have begun a one hour strike today at 8am on the 30th of September. As a result 2 flights were cancelled and 33 were rescheduled or delayed. This followed a strike by the Transport Workers Union on September 20 and yesterday Customs and Quarantine staff stopped work for separate pay problems. Meanwhile today Qantas baggage handlers and ground staff were protesting over ongoing pay and conditions.

Trade Unions are the result of people in the same area of work coming together to bargain for more strength of improved pay and conditions. They generally aim to protect the interests of union members by negotiating higher pay rates, improve the working conditions of members and promote quality of life issues. When strike action occurs, it stops or slows the flow of profit that the company receives, and in the case of Qantas, it inconveniences the public as well, which may influence the public's decision in which airline carrier they decide to fly in the future. Here in Qantas they are attempting to exercise their right as part of the Trade Union to attempt to stop work and force Qantas to consider their case for better pay and conditions.


Thursday, September 29, 2011

Australian bonds follow US Treasuries higher

SMH.com.au
29/9/2011

Investors in Australia have chosen to go with more secure sources of investment by going with government bonds, and have followed suit with the US Treasuries, after a 10 year bond futures contract was trading at 95.750, while on Wednesday it was trading at 95.690, with a yield of 4.25%.

This is due to the ongoing uncertainty over Greece's debt crisis and the measures the G20 and the Eurozone are going to initiate to solve this problem.

In Commerce we have learnt that Government bonds hold less risk, but also less return. People that purchase these bonds generally prefer the security of these bonds, and therefore are prepared to take less risk. In these current times of economic uncertainty it is therefore a good time to hold these types of investments as stocks are likely to fall, or be very uncertain for an extended period of time. These types of assets are called Income or defensive assets. This is a particular area in most investment portfolios, which can also consist of investment accounts, shares, property, managed funds and superannuation.

Wednesday, September 28, 2011

Newspaper Article on Great Depression

In America during the Great Depression of the 1930's, living conditions for most Americans were very poor. At the beginning of the Depression in 1929, the employees of companies were the first to go. This meant that there was less money being spent on goods and services, which meant that more people became unemployed, and at the height of the depression 25% of Americans were unemployed. This cycle ensured that spending fell from $79 billion to $46 billion between 1929 and 1933.

This meant that businesses by the thousands were becoming bankrupt, unemployment was rife, and savings were wiped as banks went bankrupt. This meant that no money was now within the reach of people who needed to repay their mortgage, and therefore were evicted from their homes.

In America there were two main areas where people resided- in farms or in cities. As the Depression worsened farmers had to leave their livelihoods and properties after becoming bankrupt, and this was not helped by American Dust Bowl that was caused by severe drought that destroyed many farmer's crops from 1930 to 1936. Meanwhile in cities there were many 'food lines' which consisted of people lining up for soup or bread, as people did not have enough money to buy necessities. However these lines were usually a place of shame for the people, as it meant that they did not have enough money to care for themselves or their families.

President Hoover supported volunteer groups and charity and many groups heightened morale, but this effort was short lived as it relied on public support, which did not have enough money.
People that still had a place to live were most likely to have to offer their place to a friend or to extended family, and with the usually uncomfortable living conditions that had few furnishings and little hot water they soon became crowded.

For those who were evicted out onto the streets, shanty towns (named Hoovervilles, after President Hoover which was blamed for the Depression) were set up outside major cities that consisted of wood and cardboard boxes. Homeless men slept on park benches with newspapers as blankets, and as a substitute for meat gophers and rabbits were caught and then roasted on a fire.

Hoovervilles were usually constructed with material found in garbage dumps and construction sites, and were built next to rivers. Due to the high turnover in these homes, homes could be sold, and the top market price was usually $50. In some cities land was set aside for these Hoovervilles, but sometimes police and other intolerant groups would come and destroy these shanty towns.

By the year of 1933 many Americans were out of work. This meant a lot of pressure on the breadwinner of the family, and they also felt a lot of pain as he couldn't provide for the family. This would cause men to abandon their families and 'wander' America, looking for food, begging and looking for work- however usually hundreds of men would look for one place of employment, meaning that there was even more pressure.

These bread lines would often form as early as 4am on winter mornings as men prepared to have their soup. In 1931 there were 82 bread lines in New York, serving 85 000 meals daily.
In the bread lines they were served different things, depending on the demand of the food. There was usually stale bread and soup (that was watery, lukewarm, and with the odd vegetable). After a few minutes an authority figure would ask them to leave to make room for the people still waiting, and then the men would go into another food line to wait for another meal.

These poor living and surviving conditions were suffered by the people of America during the Great Depression, until it lifted in the middle of the 1930's.

BHP reveals WA Ambitions

SMH.com.au
28/9/2011

BHP has said that its growth ambitions are bigger than its main rival Rio Tinto. As both companies are doing battle in the current Australian mining boom, they are aiming to sell more iron ore to growing countries such as India and China, who are currently leading steel production growth.

This would mean that BHP would now have a consistent higher share price, possibly coming close or catching up to Rio Tinto as they attempt to grow their business at Pilbara by growing it to obtain 240 million tonnes annually, and an overall target of 350 million tonnes a year.

This growth would mean more money into the Australian economy because of the amount of exports BHP are producing to China and India, and this would mean more economic stability for Australia's economy as it prepares for another recession due to the European debt crisis, and also because mining accounts for over 5% of Australia's Gross Domestic Product.

Tuesday, September 27, 2011

Aussie stocks set to surge (Live blog)

SMH.com.au
27/9/2011

This article is about how Wall Street's latest gains overnight will mean that Australian shares will jump as well. This optimism is caused by the fact that Europe may find a way to resolve its debt crisis, and the ASX is set to rise as much as 2.7% after the US rose 2.5% and Europe rose 2%.

This means that the rise in confidence in Europe will equate to a further rise in share markets around the world, as it is due to the increasing reliance of globalisation around the world. As Australia is heavily reliant on Western stock exchanges for its confidence.

However Australia is also reliant on the US dollar, as America is one of our largest trading partners. It has fallen against the US dollar in recent times, but it has only fallen half as much as BHP since May, and the dollar is the reason why Australia's economy has been able to go through the debt crisis better than other nations.

Monday, September 26, 2011

Debt Crisis- Saying goodbye to Greece- softly

SMH.com.au
25/9/2011

This is a column by financial journalist Michael Pascoe that believes that Greece will default on its bailout by the Europeans. He shows that Australian Treasurer, Wayne Swan, cannot give a simple answer on Greece's problems, as he knows that Swan knows that it is impossible for Greece to pay off its debt. Therefore the EU should no longer be funding Greece to not default

Usually if a country like Greece was in debt it wouldn't be much of a problem as Greece does not have a rather large economy. However it is part of the European Union, which services the second largest stock exchange in the world. And therefore it had been bailed out by the European Central Bank, in a loan in which Greece will not pay back. This will leave Europe in plenty of debt, and meaning that stock markets around the world but especially in Europe will fall, possibly sparking a double dip recession, which will be worse than the GFC of 2008-09.

Pascoe does not believe that the IMF or the G20 will do anything about this problem except to throw more money at Greece that seems incapable of sorting its finances.

Sunday, September 25, 2011

G20 plea falls on deaf ears as shares nosedive

The Australian

24/9/2011

http://www.theaustralian.com.au/business/markets/g20-plea-falls-on-deaf-ears-as-shares-nosedive/story-e6frg916-1226144913121

Shares from around the world and in Australia tumbled on the 24th as shares fell again after its horror day on Thursday. Korean shares fell 5.6%, Hong Kong fell 2.2% and even China fell 1.1% in the Asian region, meanwhile in Europe the STOXX 600 fell 4.6% and the S&P 500 also fell 3.2%. The G20 in the possibility of a second financial crisis has stated that it is committed to an action plan of policies to ensure global economic stability by introducing its bailout fund of $605 billion AUD.

However due to the Australian dollar falling below parity with the US dollar it means that stocks with offshore earnings rose, especially BlueScope steel rising 6.2%, but with mining stocks came a fall, with both mining players BHP and Rio Tinto both falling around 3%.

This fall was due to American and European stocks falling, which affects Australian and overseas stocks heavily due to their influence in foreign trade. Australia exports 7.3% of its products to the US and imports 13.6% from America which means that whatever happens overseas is bound to affect Australia. The countries of the EU is another large trading partner (including the UK) but trade has fallen throughout the last couple of years.

Friday, September 23, 2011

Dollar licks wounds after heavy loss

SMH.com.au

23/9/2011

http://www.smh.com.au/business/dollar-dives-in-black-day-for-global-sharemarkets-20110923-1knsq.html

The Australian Dollar has fallen to a 10 month low of 96.92 US cents. This over the last 20 years is an extremely high figure but in recent times any price below $1.02 is a cause for worry.

It has lost 5% so far this week, showing the instability of foreign markets and currencies as they brace for worse economic times ahead, as Greece may default on its loans.

This is bad news for Australians buying overseas as the dollar depreciated below parity against the US dollar meaning that items, especially through online shopping, will be more expensive. This will mean that exports will be more of a viable option for overseas buyers but with the current instability the Australian exports may not be bought as it may go over parity again in the near future, even though experts predict it may hit a 'low' of 95 US cents.
Along the same lines of the Australian dollar it may not increase tourism to Australia as prices may change in the near future.

This current currency fluctuation will affect global business as there is a lot of currency risks riding on the Australian dollar as it flaunts above and below the parity line.

Thursday, September 22, 2011

ASX plunges below 4000 points

The Australian Share Market (ASX) fell below 4000 basis points today after the US Federal Reserve warned that the US economy is heading towards bad economic times and after they had found evidence of China's economy slowing. As a result the Australian dollar fell to a level of approximately 103 US cents and the loss of 4000 points means that $31 billion in value has been wiped off, and the ASX is trading at its lowest point since April... which was when the last share market game was played.


This relates to Commerce as with economies world wide being battered by this news and news of the Eurozone debt crisis this is not good news for investors as markets world wide are being hit similar to Australia. For example, previously stable mining companies such as Rio Tinto had dropped $4.49 in one day, while BHP Billiton had fallen $1.50, at 6.45% and 4% respectively. Big 4 banks all dropped 2% of their value as the worsening economic crisis could hurt their long term profitability and growth.
This news is therefore not good for players of the share market game and for real investors as the uncertainty in Europe and America are hurting the market. However investors in Fosters will have something to smile about as SABMiller took over the company in an offer worth $12.3 billion. As a result Fosters jumped 8.2% and other liquor based groups such as Treasury Wine Estate and luxury accessories group OrotonGroup also rose after sales had exceeded expectations.

This hit on the share market has not helped the Australian dollar that is to go below parity against the greenback as it has been steadily dropping within the last few days, that could spell the end of the Australian dollar's strength against the US dollar.