It's a cool but bright morning here in Sydney, lifting my mood. For reasons that I won't bore you with, I have had some difficulty in concentrating this week. I haven't been very productive at all. With the light brighter, I spent some time wandering around the internet, just reading.
Staying with the writing theme that began with So you want to be a writer part 1, fellow New England writer Denis Wright's Chutney, decisions, and writing looks at another aspect of the writing bug. It's a short piece, but worth reading.
In the midst of what has been a gray week, I did manage to dash off a 1,200 word opinion piece for On Line Opinion's December feature topic, Christmas: Naughty or nice: what should Santa bring Australia this Christmas? is the topic's theme. I will post a link here once its on-line.
It's been very wet in the area. This photo from Gordon Smith's lookANDsee is further north and in more open country, but will give you a feel for the conditions. Where Gordon lives outside Armidale, the annual rainfall is around the 770 mm mark (30 inches). So far this year it's been 1100 mm (43 in.)
Not pleasant conditions to be outdoors, especially if you can't light a fire!
On 6 December, Curtis Cartier reported on the case of US blogger Crystal Cox: Crystal Cox, Oregon Blogger, Isn't a Journalist, Concludes U.S. Court--Imposes $2.5 Million Judgement on Her. The story includes a link through to a copy of the actual court judgement.
The case is very much linked to US shield laws that protect journalists and sources, but is still interesting because it bears upon these questions: are blogs in fact part of the media; can bloggers especially independent bloggers claim to be journalists; where should the line be drawn? If you have time, have a quick browse of the judgement itself. Having read some of Ms Cox's material, I wouldn't classify her as a journalist myself, but that's just a personal opinion independent of the broader arguments.
The Australian media has been reporting on developments in Europe at some depth. I haven't commented at any length because I haven't had a great deal of value to add. However, European events over the Euro and EU are taking place against a background of broader economic change.
On Wednesday 7 December in one of my presently rare posts on the Managing the Professional Services Firm blog, Why Chinese over-investment is important, I reported on the views of Michael Pettis on imbalances in the Chinese economy. On 8 December, a report in the Indian Economic Times recorded that Indian industrial output fell by 7% in October, dragged down by a fall in the capital goods sector. Then on 10 December in the Sydney Morning Herald Ian Verrender's The madness that lies at the heart of the super system provides some interesting insights into problems with Australia's national superannuation scheme.
Three apparently disconnected stories, but each indicative of elements in the change process, with investment the common link.
By way of background to international readers, Australian has a compulsory national superannuation scheme under which employers must pay a proportion of salaries into a superannuation account chosen by the workers. The numbers involved are now quite mind-blowing.
China has a bit over $US2.3 trillion in overseas reserves. By contrast, the value of Australian super funds is now around US1.3 trillion. That may be smaller than the Chinese number, but its still a very big number and growing.
Now the growing size of Australia's accumulated superannuation funds raises all sorts of issues, some of which are explored by Mr Verrender. However, the thing that is niggling at my mind is the nature of investment and returns on investment itself.
I don't have time to spell this out today, so I will finish with a simple statement.
Global economic change requires a rebalancing of investment in a general sense. That's not new. We have seen it before. But what happens if at the same time the global desire to save exceeds real global investment opportunities?
Here my focus is not on the conventional macroeconomic effects, but on returns to investment itself. On the surface, surplus capital can only be accommodated via a fall in returns on investment. What does that mean? Further, what happens if there are market imperfections that actually prevent effective matching of savings and investment?
I guess that you can expect more on this later.