photo credit: Pizza527

Renegade Economists Podcast 107

As broadcast on 3CR on Wed Sept 23, 2009. Subscribe here

Climate Crescendo: Karl whirs through climate issues from an economics perspective and finishes with Sharna Nolan from Skateistan.org. So so much more to discuss on this topic. Will we write a script one day and time it?

Show Notes
Albanese earned $1.5m in basic salary for 2007 BUT received a $1.3m cash bonus.

Taken from the Age’s Capital Gains – 0509090
45 william st
Becton – bought $33.3m late 2007
For sale at $60m now
= $27m profit in 24 months

Leaked document: Oz discouraged Pacific islands from tough emissions stance – www.crikey.com
Bernard Keane writes: re the Small Island States forum in August.

The Smaller Island States’ meeting is held prior to each Pacific Islands Forum, and is composed of states like the Cook Islands, Nauru, Niue, the Marshall Islands, Tuvalu, Palau and Kiribati, all of whom face severe or existential threats from the impact of climate change via rising sea levels and more extreme weather.

While it is standard for a communiqué to emerge from the SIS meeting, no communiqué was produced after the meeting prior to the Pacific Islands Forum meeting in Cairns. Instead, an anodyne press statement was issued by the PIF secretariat, which was controlled by Australia as Forum host.

The press statement referred to “deep concern by the serious and growing threat posed by climate change” but made no mention of emissions reduction targets.

Music

Skream – Autodub
David Shea – Art of Memory

Dust storm 2: a health hazard beyond comparison – – www.crikey.com
Ben Sandilands writes:

Particulate pollution has soared to levels never seen in Australia in recent hours as the red dust storm intensifies over much of the top three quarters of NSW.

By 10.30am this morning the Sydney eastern suburb of Randwick had gone from low pollution readings to 3066 on the Air Quality Index posted by the NSW Department of the Environment.

A reading of 200 represents the boundary above which fine particles are declared hazardous to the health of fit and unfit persons alike.

Differences in Greenhouse Gas Emission Around the World

As the World Resources Institute highlights there is a huge contrast between developed/industrialized nations and poorer developing countries in greenhouse emissions, as well as the reasons for those emissions. For example:

In terms of historical emissions, industrialized countries account for roughly 80% of the carbon dioxide buildup in the atmosphere to date.

Annually, more than 60 percent of global industrial carbon dioxide emissions originate in industrialized countries, where only about 20 percent of the world’s population resides.
Much of the growth in emissions in developing countries results from the provision of basic human needs for growing populations, while emissions in industrialized countries contribute to growth in a standard of living that is already far above that of the average person worldwide. This is exemplified by the large contrasts in per capita carbons emissions between industrialized and developing countries. Per capita emissions of carbon in the U.S. are over 20 times higher than India, 12 times higher than Brazil and seven times higher than China.

German Watch published a Global Climate Risk Index in December 2009 that attempted to list the nations that would be affected the most from climate change based on extreme weather such as hurricanes and floods.
Between 1998 and 2007 they found these were the most affected nations:

Honduras
Bangladesh
Nicaragua
Dominican Republic
Haiti
Vietnam
India
Mozambique
Venezuela
Philippines

Research shows that the ocean has been absorbing more than 80% of the extra heat, causing water to expand and sea levels to rise. Between 1961 and 2003, the IPCC says, the global average sea level rose by an average of 1.8mm a year. And between 1993 and 2003 it was rising at a rate of 3.1mm a year.

Garnaut: The ETS cannot be further distorted
The Great Crash had three sorts of effects on the climate change challenge.

First, it temporarily and briefly stopped the growth in global emissions, but by an amount that is not material in the sweep of history.

Secondly, the unemployed resources, the unemployed capital and labour that were a consequence of the great recession, lowered the cost of investment in structural change. It made this a relatively cheap time to invest in the new technologies. Many countries including the United States and China made a major place for investment in emissions reducing structural change in their stimulus packages and the total effect of this on the world scale was considerable.

Thirdly, the political economy of mitigation became more difficult. Because it is a time of rising unemployment globally, demands by established industries for support for resistance to structural change are on the rise.

Pivotal week for climate change action as world leaders gather
JOSE MANUEL BARROSO, President of the European Commission

Our estimate is that by 2020, developing countries will need roughly $US150 billion a year to tackle climate change. Part of it will be financed from economically advanced developing countries themselves. The biggest share should come from the carbon market if we have the courage to set up an ambitious global scheme.
…
But some of the money will need to come in flows of public finance from developed to developing countries, perhaps between $US30 billion and $US70 billion a year by 2020.

Contract & Converge – Aubrey Meyer

Macquarie Bank wants $345 million to end airport management – Terry McCrann

THERE is rape and then there’s Goth and Vandal style all-out flatten to the ground total pillage. Like what Macquarie Bank’s doing to Sydney Airport.
That much beloved philanthropic organisation Macquarie Bank has taken nearly a billion dollars in fees out of the Sydney airport company and wants more than a third-of-a billion more to give up the right to keep pillaging. Sorry, managing.

Further, confirming its entirely justified reputation for wily self-interest, MacBank has chosen to give up its right to manage precisely when there’s going to be precious little left to pillage.

Dean Paatsche’s institutional advisory group RiskMetrics has been standing in the way, pointing out a few very inconvenient truths and advising investors in Macquarie Airports – MAp for short – to vote against the dud deal served up to them by their directors. Their independent directors.
The proposal as put is a monumental failure in governance. It is asking MAp investors to pay MacBank a quid – $345 million worth of quids actually – without receiving any quo.

In short, directors are asking MAp investors – with the prominent exception of one very large investor – to stiff themselves.

It is a proposal that should never have been put. It is a proposal that should now be abandoned or at the very least postponed – to a date not at MacBank’s clear convenience. And failing that rejected.
Investors with the obvious exception of the 22 per cent stakeholder MacBank would be advised to sack their board – the independent directors – and get one that can act in their interests.

Those interests can be stated very simply. To remove MacBank as MAp’s manager – to ‘internalise management’. But doing so, without paying MacBank $345 million as the mother of all ‘Golden Goodbyes.’

And absolutely crucially, only after clear, irreversible and unchallengable confirmation that MAp won’t get stuck with an extra $120 million a year interest bill as a consequence. Or that it can walk away from those debts, US mortgage-default style.

The – next – board of MAp should consider it their sole task to make it so.

Now the basic internalisation concept is entirely sensible. There’s no point paying MacBank between $15 million and $75 million a year – plus even bigger ‘performance’ fees when it ‘performs’ – for ‘managing’ investments in a few airports.

The MAp investors can vote anytime to sack MacBank without the payment of a red cent. Although in those circumstances MacBank could vote its 22 per cent against the sacking.

So why are MAp investors being asked to authorise the $345 million ‘Goldern Goodbye?’

To simplifiy, beecause sacking MacBank could be deemed a change in control, triggering convenants in MAp’s borrowings which could allow the 40 or so banks that have provided $4 billion to increase the interest rate by up to 300 points. That woulod cost MAp an extra $120 million a year.
…
Paying MacBank $345 million might make some sense if it was able to ensure MAp didn’t get hit with an extra $120 million a year in interest.
…
The dates are very interesting. The meeting is scheduled for September 30.
Guess what if the deal was ticked through? The $345 million would flow into MacBank’s profit pool, as of that date, for the September half-year, and much of it straight out in profit-sharing for execs.
And on March 30 next year, any residual contingent liability would disappear from MacBank’s books – oh so conveniently, just one day before MacBank prepared its accounts for the end of its financial year.

If you wanted to be a practical joker, just postponing the meeting for a week would force MacBank execs to wait an extra six months for the fruits of the pillage; and force MacBank to include the liability in its accounts next year.

These numbers also go some way to explaining how and why Nicholas Moore got paid over $30 million a couple of years ago, all his colleagues were also handsomely rewarded, and why he is now the MacBank CEO.

He’s the one that ‘found’ the goldmine at Botany out past Mascot, which has yielded $941 million for MacBank, and counting.

Wish We Could Have Covered

It’s come to our attention thanks to a letter from 3RRR Stalwart Johnnie Von Goes, that a recent ….

In the past few weeks small pubs and licensed premises around town have had visits from Consumer Affairs in attempt to curb alcohol related violence.

These pubs have been told they must provide security guards if they are going have live music…

Any sort of live music…
Any size crowd…

A security guard gets paid around $250 per shift. Bands in small pubs these days don’t get much more than a rider and a meal. It’s not hard to do the maths. At least one pub has already stopped hosting live music and it seems a matter of time before a whole lot more will be forced to follow suit.

This problem extends further. A Bazooki player in your local Greek tavern will require the venue to hire security. That means we’ll need a security guard to watch over 4 families eating the mixed grill and greek salad. Blues at The Rainbow Hotel to 15 people on a Tuesday night will require security.