Where are the Australian industries heading?

Advocated by Australia, APEC was established in its first Ministerial meeting in Canberra, Australia 1989.

"Asia-Pacific Economic Cooperation (APEC) was established in 1989 in response to the growing interdependence among Asia-Pacific economies. It began as an informal dialogue group, APEC has since become the primary regional vehicle for promoting open trade and practical economic cooperation. Its goal is to advance Asia-Pacific economy and provide a sense of community. Today, APEC's 21 member economies had a combined gross domestic product of over $18 trillion and 44 % of the global trade."

APEC objectives:

•   Economic growth
•  Liberalisation
•  Multilateralism

Financial Liberalisation refers to reduction of any sort of regulations on the financial industry of a given country.  

Multilateralism is a diplomatic term that refers to cooperation among several nations.

Together with Taiwan and Hong Kong, China became an APEC member in 1991.

The Chinese economy is one with very regulated liberalisation, the government controls and restricts ability of anyone to invest in China, except for Direct Investment which is physical investments, and not financial. If a much regulated system like the Chinese financial system reduces some of its restrictions, the system is going through liberalisation.

Financial Liberalisation means lessening restrictions on various types of instruments of lending institutions. Such instruments can be traded. Examples of institutions are banks, countries treasury, money market funds, hedge funds, investment banks. Whenever we lift any restriction we are liberalising.

The U.S on the other hand has an extremely liberal system which they have liberalised over the last 3 decades. Many people seem to believe that the current crisis is a result on to much liberalisation, since it allowed the creation of risky financial loans, and the failings of rating of several financial institutions which created many of the problems that have caused the recession.

Industry policy in Australia has been subject to a major transformation over the last 30 years. Barrier protection to manufacturing industries, mainly via tariffs, has been reduced from 35% to 5% in 2000-01, thus moving Australia a long way towards the Asia-Pacific Economic Cooperation (APEC) goal of free trade access to developed countries by 2010.

The Tariff Board was established in 1921 under the Tariff Board Act 1921-1966. Its main responsibility was to advise the Government on questions of assistance to Australian industries. In particular, it was charged with reporting on 'the necessity for new, increased, or reduced duties' and on 'the necessity for granting money for the encouragement of any primary or secondary industry in Australia'. An example would be the bailing out funds provided to the car industry.

It is important that policy makers pay more attention to the alternative tools for achieving industry policy objectives, namely non-tariff barriers, anti-dumping measures and assistance through the Budget, sometimes referred to as State aid or Public support for Industry. Compared with other Western countries, Australia is an almost negligible user of non-tariff barriers.

“A company is anti-dumping if it is importing a product from overseas at prices lower than the normal value of production the item can be made in the domestic prices of the product or the cost of production on its own domestic market.” Example I would buy a car for half the retail price overseas that it would cost for and Australian company to product one.

There is an important distinction between the assistance provided to specific industries and the general assistance measures to support research & development, innovation and exports. 

There is an alarming trend of long established manufacturing companies and retailers filing for bankruptcy in 2010 and we should all start asking the question. Are we heading in the right direction?

I don’t claim to be an Economics expert, I am just voicing some concerns that Australia is loosing too much of its manufacturing infrastructure and we should be focusing more on the domestic market before attending to the global market demands.

Choosing a fine watch with good craftsmanship!

As an amateur of great craftsmanship I have always enjoyed mechanical watch movements. The way all the gears are put together and how they are individually powered to keep the time. It is only recently that I have started to show more interest in the finer time pieces. I personally don’t own any extravagantly expensive watches and would not be able to justify these expenses to anyone close to me. However one can always appreciate the work involved in such time keepsake.

My lesson about watches started with the terminology used in the industry. The term “Chronograph” is applied to any watch with stopwatch functions. They can be called a chronograph and it has nothing to do with any measurement of accuracy, it is merely a statement that the watch has this function. However having the term “Chronometer” means this is a very accurate timepiece. It came from ships needing precision timekeeping to allow precise celestial navigation. The term chronometer came in to use to describe timepieces accurate enough for ship navigation. In 1973, the Controle Officiel Suisse des Chronometeres (COSC) came in to existence as the official testing and certification control board. These watches are more expensive.

Let’s look at the branding and clarify some of the misconception & belief. Can my $25 Casio be more accurate than my $10,000 mechanical Rolex? The answer is yes. These are due to temperature changes and gravitation effect on the watch.  The table below is an extract from the chronometric website.

Reasonable Accuracy Expectations by Type of Watch	Seconds gain/loss per day			Best Accuracy
	Worst	Typical	Best
Vintage mechanical watch in good repair	+/-60	+/-15	+/-5	99.9826%
Modern mechanical watch non-certified	+/-10	+/-5	+/-2	99.9942%
Modern mechanical watch chronometer certified	+6/-4	+/-3	+/-1	99.9977%
Modern quartz watch non-certified (normal)	+/-2	+/-1	+/-0.1	99.9998%
Modern quartz watch chronometer certified (rare)	+/-0.02	+/-0.02	+/-0.0	99.9999%

Now let’s have a look at what would be some of the gem’s to look for in this industry. I can hear you say "Rolex". Guess again, if you need to show off to your friends and impress female friends this is the amateur’s choice. For the more knowledgeable in this refine industry try remembering the list below. They are not as well known as "Rolex" but they are exquisite. They will give you a great feeling of joy and satisfaction when you learn about what is involved to have it made.  

High-End Luxury examples of brands in this range: “A Lange and Sohne”, “Alain Silberstein”, “Audemars Piguet”, “Blancpain, Breguet”,” Franck Muller”, “JLC”, ”Parmigiani”,”Patek Phillipe”, “Ulysse Nardin”,”Vacheron Constantin”. Expect to pay starting at $5,000 for Steel models, starting at $10,000 for Gold on a leather strap, starting at $20,000 for Gold on a Gold bracelet with the sky as the limit. Some watches can exceed $2,000,000.  

If you are lucky enough to have the kind of money necessary to be involved in this field, then you are now in the exclusive club of the rich & famous who knows the value of owning one of these items. A respected collector of finely crafted time piece. I am very envious of you.

For the round of the mill collector or for someone who just won the lottery these modest but still quite expensive range below will suite you. Luxury brands such as “Breitling”, “Cartier”, “Ebel”, “Omega”, “Rolex” range from $1,000-$4,000 for Steel models, $2,500-$8,000 for Gold on a leather strap and $5,000-$20,000 for Gold on a Gold bracelet will tell the average Joe that you are a successful man or women in your field.

If you are an average Joe with a good salary and no mortgage and still want a timepiece with pedigree I have the list below. “Baume & Mercier”, “Raymond Weil”, “Tag Heuer “ range from $500-$2,000 for Steel models, $750-$4,000 for Gold models with moderate to heavy discounts available through various dealers.

My last list is the basic luxury wristwatch. This is the entry point for anyone with a mortgage and a family.  “Epos”, “Fortis”, “Movado”, “Oris” under $1,000 for Steel models, under $2,000 for Gold models and you can get moderate to heavy discounts available through various dealers.

With this limited knowledge you should now be able to do your own research. Learn about each movement “quartz” or “mechanical” and start your journey of discovery.

Do you set boundaries on your abilities?

I don’t claim to be and expert on human social interaction but I am often surprised in daily conversation the amount of people who set boundaries on their abilities. I was on holidays a few weeks ago and I was dressed in casual clothes looking like a tourist and relaxing, when a gentleman approached trying to sell me a few trinkets. He addressed me in English then in French setting the tone about the beautiful weather. I replied in Creole his native tongue and I knew with the expression of total surprise on his face, that this was not expected. It broke the ice between us and he wanted to know more about me. We got to talk about his dreams and ambitions and I found out that he has being selling on this beach for 13 years. He was fluent in 4 languages, self taught in Italian, English, French and Hindi.  His goal was modest, a small car and money to retire.

This reminded me of the story of the elephant that was capture at birth by circus performers. To train and prevent an elephant from escaping at birth, he is tied with a chain to a concrete block buried in the ground. As the elephant grows larger and older the chain is reduced smaller and smaller. When the elephant achieves maturity the chain is finally replaced by just a rope and a peg in the ground.  It puzzled me why the strength of the restraint was weakened with the passing of time. 

The explanation was sad but also true. The elephant when first tied up will use all his strength to escape, pulling and struggling to get free. With time the pull is less vigorous and when it achieves maturity the elephant gives up trying to escape. The elephant now believes that he cannot escape if his leg is tied, even if the rope is made of straw.

Everyone can achieve great things. Don’t let anyone tell you different.  Most of the limitation we perceive is in our own mind. Avoid being like the elephant that stops trying because he believes he is tied down.

On holiday I was reminded that I should keep trying new things.  Hope this little story motivates you in doing something too. That’s why I maintain this blog, it is my non-financial contribution.

Why are "High Speed Trains" just a pipe dream?

A civilised society needs a fast communication network, a fast transport infrastructure for leisure and business, a sewage network able to cope with the cities expansions and a high education standard to bring new skilled adult to this society. These shall keep the circle of life going round.

Sadly with the credit crisis the wealthy countries are tightening their belt and they are not investing as much in these new infrastructures. We as consumers eat, drink and contribute to society, by working, paying taxes, buying goods and travelling.  We need shelter, food and through our daily activities contribute to the economy and the global market.

Infrastructure upgrades are costly and taxing on the economy. Australia has invested heavily in the NBN the national broadband network a communication network and we should see the benefit in the years to come.

However the need for a better transport system is being hampered by the size of this undertaking. One solution should be a high speed rail network. Unfortunately this is unlikely to happen as long as the local air travel remains economical in Australia. The other obstacle is the 10 Billion dollars price tag to upgrade the rail lines connecting the main cities. This undertaking would require a strong leader facing opposition from the air line industry which would end to loose the local route business and the taxpayers unwilling to be slugged with a modified carbon tax.

Communication, transport, sewage and education are the four main pillars of a modern society. They will require our constant scrutiny to maintain the modern standard way of life. We should not be complaisant or settle for second best.  

Other countries considered to be third world are moving rapidly and closing the gap. They are spending to obtain the modern way of life we take for granted. New Universities are being built and high speed rail lines are being laid. I predict that by 2020 most of the so call third world counties will be unrecognisable. They would be comparable to one of our modern cities.

How Will Carbon Tax Affect Us?

The idea behind the carbon tax is to make fossil fuel more expensive than alternative forms of energy such as wind, solar and whatever else we might come up with. The money generated by the tax should be used to finance new research and eventually a new solution because lets face it there is nothing today to completely replace the use of fossil fuel.

As a rule a carbon tax should be imposed on the large companies generating the carbon emission. In this current political climate there is heavy resistance in taxing the energy industry because firstly they are crying poor and secondly they are proposing serious cost cutting alternatives. This can be as far reaching as limiting expansion and reducing contribution to researching a solution. A more immediate impact would be reducing their workforce.

The energy industry plays a very big percentage in the economics of a country and these threats should not be taken lightly. The softer target will unfortunately be the average tax payers which has less political and economical clout and can be forced to pick up the tab for the lack of foresight from the energy industry.

What’s the solution that would make everyone happy? I can’t see anything in the horizon as a quick fix. Anything with the word “Tax” in it makes anyone cringe. The current problem of this century is that we have experts saying that we have little time to fix global warming and we will be facing an energy crisis soon. So all the world leaders are in a panic mode trying to find a solution. They are also trying to find the money to finance the storm which is coming.

Most people of my age would probably remember the 'Y2K' computer panic. We had all kinds of experts saying that there was a big problem that could cripple the economy. Fix or patch all your computers. Their were idiots even saying that things could explode. I guess we lived through it.

I don’t think there is a need for panic with global warming or the energy crisis. If petrol gets too expensive I would probably cycle to work. I think most governments would probably implement a “Tax” or a “Levy” of some kind because there is a strong chance that they will spend more money from the coffers that is required and also mismanaged our Tax contribution.

So if you are a ‘Greeny’ for a ‘Carbon Tax’ let’s make sure that there is no double dipping from the government. They can’t expect to tax us and the energy industry and get away with it. That’s just being greedy. I would rather hope that the big business would clean up after their own mess and be the only one to pay but the cost will most likely trickle down to us. We would have to pay more for the power usage.

Let’s hope that a new satisfactory source of energy is discovered that is clean and can replace fossil fuel. If we cannot find anything new or better we will have to change our way of life. As an engineer and since there are others like me. We are still working and thinking on a solution that will work for all of us.