Plunging Export Prices put Australia in Dire Straits

Out of all the casualties of sub-prime, only Australia managed to register growth and its dollar went up. But as usual, just around the corner, things can just about turn awry. And it is with Australia as they experienced a record export price slump from April to June 2009.

This will certainly be a threat to its economy in coming months, providing one reason for interest rates to stay at record lows for some time to come.

The 20.6 per cent tumble was driven by a 36.8 per cent loss in the price of coal, coke and briquettes while metal ores fell 23.5 per cent, a chilling reminder of what the slump in global demand has done to Australia's two biggest exports.

Reuters in its report on 17 July 2009 believes this bodes ill for the country's terms of trade — what it gets for exports compared to what it pays for imports. The Reserve Bank of Australia (RBA) had already flagged a fall of around 25 per cent, but some analysts now fear it could be worse.

Helen Kevans, an economist at JPMorgan, estimated the terms of trade to fall by least 30 per cent, draining national income.

"It now appears the squeeze will be worse than we currently forecast," she said. "Indeed, it looks likely that the decline also will be larger than the RBA currently predicts."

Australia's terms of trade had climbed by a third in 2008 to a record high, as the country rode a resources boom. Much of that came courtesy of huge annual contract increases for coal and iron ore, set back in April 2008 when commodities were red-hot.

Since then global trade has fallen off a cliff and major customers have won, or are pressing for, steep cuts in this year's contract deals. Chinese steelmakers are hoping for at least a 40 per cent cut in iron ore contract prices, while Australian miners haggle for a more modest reduction.

A drop in the terms of trade eats into corporate profits, investment, dividends, wages and tax receipts.

"This supports an RBA that is likely to stay sidelined," said Su-Lin Ong, senior economist at RBC Capital. "We expect it to retain an easing bias for much of this year although we do not think that the RBA will exercise this bias."

The central bank slashed rates by 425 basis points between September and April, but has been on hold since.

Yet not all is dark on the trade front.

"There are indications that the global economy is bottoming out and some of the key commodity-consuming nations are picking up," said Michael Blythe, chief economist at Commonwealth Bank.

"Trends in the Chinese economy are particularly encouraging for commodity producers like Australia. Commodity prices will, on average, be lower in 2009. But they should rise in 2010."

And while export prices were down, so were the cost of imports. Import prices dropped 6.4 percent in the second quarter, helped partly by a rise in the Australian dollar and lower prices of iron and steel imports.

The consumer price index for the second quarter is out next week and annual inflation is expected to slow to 1.6 per cent, from 2.5 per cent the quarter before and under the RBA's 2 to 3 per cent target band.

Yet underlying inflation will likely remain above 3.0 per cent as the cost of services like education and healthcare stay stubbornly elevated.

"It (the CPI) won't be enough on its own to bring on another rate cut given that the RBA has already cut pre-emptively and very aggressively, and given that the underlying measures of inflation are still relatively high," said Shane Oliver, chief economist at AMP Capital Investors.

LDL Cholesterol is Actually Good?

This one you gotta read.

It turns the whole thing around-a paradigm shift of sorts. It is an expert opinion from a medical practitioner, Al Sears MD from the American College of Cardiology. From his experience, he says that low cholesterol levels increases cancer risk. This is his story.

"For years, I've been telling my patients that the medical establishment’s obsession with lowering cholesterol to prevent heart disease is causing more harm than good.

If your doctor continues to get you worried about your high cholesterol levels, here's a bit of news for you...

In fact, your high cholesterol may be protecting you from cancer.

Today, I'll explain the truth behind the myth of cholesterol, and show you how to achieve heart health naturally.

A new study published in the Journal of the American College of Cardiology revealed that driving down cholesterol levels actually increases the risk of cancer.

Researchers at the Tufts University School of Medicine found that among people taking "statin" drugs - like Lipitor and Zocor - there was a higher rate of cancer. Although the link between the drugs and cancer wasn't clear, there was no doubt that drastically low cholesterol levels correlated to cancer risk.

The big drug makers continue to sell the notion that the best way to fight heart disease is to lower LDL levels, the so-called "bad" cholesterol.

Yet 75 percent of people who suffer heart attacks have normal cholesterol levels.

It makes sense that low cholesterol levels are linked to cancer because cholesterol is one of your body's basic building blocks. You need it to produce testosterone, to build and repair cell membranes, and to preserve your nerve cells through the formation of the protective "sheaths" that cover them.

Starving your body of this critical substance will lead to other health problems. We already know that extremely low cholesterol levels result in muscle weakness, fatigue, depression, decreased sex drive, and "brain fog." This new research shows that there may be even more deadly consequences.

What really matters is not low "bad" cholesterol, but high levels of HDL, the so-called "good" cholesterol. As long as you have a high HDL count - 75 to 80, for example - it doesn't matter whether your total cholesterol is 150 or 350. A high HDL will always keep your risk of heart disease extremely low.

So why haven't you heard this already? It may be because there's no drug that effectively raises good cholesterol levels. You can only effectively do it naturally.

Consume natural fats. Avoid processed or fast foods containing "trans" fats - these man-made substances were never meant for consumption, and your body doesn't know what to do with them. They wind up clogging your arteries and putting you on the fast track to heart disease.

Instead, get your fat from free-range or grass-fed animals, eggs, nuts, and unprocessed vegetable oils. These are some of the healthiest foods you can eat. (As with all foods, look for organic or minimally processed options whenever possible.)

The health benefit of these natural fats comes from their balance of Omega-3 and Omega-6 fatty acids. Your body needs both but, as with cholesterol, they have to be in balance. Omega-3s are great for your heart. They've been shown to prevent irregular heartbeat, reduce clogging of the arteries, lower blood pressure, and decrease inflammation in body tissues.

If you stick to eating natural fats, you'll automatically get the right ratio of Omega-6 and Omega-3, which is about 2:1. As an added bonus, you'll automatically raise your "good" cholesterol levels and you'll reduce your risk of cancer.

To Your Good Health,

Al Sears, MD"

Would you believe it?

No Hope in Sight for the British Economy

Reuters reported today (17 July 2009)that the British economy continues to be fragile.The timely advice from the IMF to Britons-reduce borrowing when recovery reach your door-steps or else....

The IMF projected that the British economy will shrink sharply in 2009 before edging into growth in 2010. As such, the government should plan to reduce borrowing when recovery comes.

In its annual review of the British economy, the IMF said the country had succeeded in averting a financial meltdown, but now needed to focus on ensuring public borrowing did not get out of control during its deepest recession in decades.

"Market conditions so far suggest the UK is getting the benefit of the doubt. But this benefit of the doubt will not last forever." the IMF cautioned.

IMF forecast Britain's economy will shrink 4.2 per cent this year before recovering to grow a wee 0.2 per cent in 2010, unchanged from forecasts released earlier this month.

"The economic outlook is highly uncertain. Recent indicators suggest that economic activity has begun to stabilise. However, the recovery is likely to be slow and subdued as banks and households go through a difficult balance sheet adjustment," the IMF said.

The global economic watchdog's forecasts are gloomier than government projections of 3.25 per cent to 3.75 per cent contraction in 2009 followed by 1.0 per cent to 1.5 per cent growth in 2010, and it identified soaring government debt as a major vulnerability.

Borrowing was likely to be equivalent to around 13 per cent of GDP in 2009 and 2010, with total debt approaching 100 per cent of GDP over the next five years.

"The success of the current policy package depends on continued trust in the sustainability of the fiscal position. A strong commitment to reverse the sharp deterioration of the public finances once the economic recovery has been established ... will be essential," the IMF said.

"Credibility would be enhanced by specifying concrete expenditure and revenue measures to achieve the desired adjustment," it added.

The Treasury said it already planned to halve the budget deficit over the next four years and bring down borrowing in the medium term.

Figures out yesterday showed that government departments have underspent by a total of £15 billion (RM87 billion) in 2008-09. taking their end-year flexibility total to £20 billion.

The Treasury could either sanction departments to spend this money if they wished or use to fund other projects or par down the deficit.

With a general election less than a year away, MPs are loath to say what cuts and tax rises they would have to implement to pay back debt, while all the main parties have accused each other of misleading the public about their plans.

The IMF said the Bank of England's monetary policy — which has seen interest rates slashed to 0.5 per cent — was appropriate, but that it was too soon to judge the effectiveness of its £125 billion quantitative easing policy.

Given economic weakness, the IMF said it expected inflation to stay low for an extended period.

It also called for the Bank of England to buy a wider range of private sector assets, which currently amount to less than 3 per cent of its total purchases, as the majority of funds have been spent on buying government debt.

Asset-backed commercial paper, which the Bank is already considering, and syndicated corporate loans would be good additions to the Bank's purchases, the report said.

The IMF also welcomed recent government proposals for financial regulation reform, but warned that the government may have to dig into its coffers to help banks out again as the recession threatened asset quality and capital buffers.

"These lingering uncertainties are restraining lending growth," the IMF said.

"Authorities should encourage banks to strengthen their capital base and explore options to improve capital structures. The authorities should also continue their contingency planning, and ... should be prepared to provide further public capital, if needed," it said.

How the Stock Market Actually Works

Once upon a time, in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for $10 each.The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them.

The man bought thousands at $10 and as supply started to diminish, they became harder to catch, so the villagers stopped their effort.

The man then announced that he would now pay $20 for each one. This renewed the efforts of the villagers and they started catching monkeys again. But soon the supply diminished even further andthey were ever harder to catch, so people started going back to their farms and forgot about monkey catching.

The man increased his price to $25 each and the supply of monkeys became so sparse that it was an effort to even see a monkey, much less catch one.

The man now announced that he would buy monkeys for $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.

While the man was away the assistant told the villagers. 'Look at all these monkeys in the big cage that the man has bought. I will sell them to you at $35 each and when the man returns from the city, you can sell them to him for $50 each.'

The villagers rounded up all their savings and bought all the monkeys.They never saw the man nor his assistant again and once again there were monkeys everywhere.

Now we have a better understanding of how the stock market works.

Oh! What a beautiful Movie!

Rodgers and Hammerstein's Oklahoma! is one big movie. Beautifully crafted and replete with wonderful songs, this musical tells the story of the cowboys and farmers in new prairie land Oklahoma.

The movie centres around a farm-girl Laurey Williams played wonderfully by Shirley Jones and a triangular love story between Curly played by Gordon MacRae and a young Rod Steiger as the farm-hand Jud. Eddie Albert provided the comedy as Ali Hakim, a Persian peddler.


Vibrant movie,great fun just to sing along.

Memorable songs include: 'Oh What a Beautiful Morning, 'I am a Girl who can't say No', 'Surrey with the fringe on top', 'Cowman and farmers must be friends' and 'People will say that we are in love' and the theme song, 'Oklahoma!'


Love this movie!