Thursday, September 11, 2014

Rupert Murdoch says page 3 topless girls here to stay as long as customers want them

Rupert Murdoch has take to Twitter once again to defend the use of topless women on page three of his mass circulation British cash cows, The Sun and The Sunday Sun (which replaced The News of the World).

While Mr Murdoch thinks the page 3 pinups are "old fashioned", he says average readers still want them.

But the media titan asked his Twitter followers for their opinions tweeting  "aren't beautiful young women more attractive in at least some fashionable clothes?".

It's a long debate between profit and punter preferences - assuming of course that readers of The Sun buy it to read the journalism.

Not surprisingly, Mr Murdoch reminded his critics who is in charge.

"Brit feminists bang on forever about page 3. I bet never buy paper. I think old fashioned but readers seem to disagree."

Wednesday, September 10, 2014

Scotland independence poll puts banks on alert; Deutsche Bank warns "be afraid, be very afraid".

After being overshadowed by other greater geopolitical events - such as turmoil in Ukraine and the Middle East - next week's referendum on whether Scotland should secede from Britain is starting to get interesting.

An opinion poll has shown for the first time that a narrow majority of Scots might vote for independence and splinter the 307 year old union with the United Kingdom.

The poll points to a knife-edge result but already it has caused enough uncertainty to push the British pound to its lowest level since November.

Here's my report from yesterday's edition of The World Today.

Now some of the world's biggest banks have gone on alert given the implications of a "yes" vote which until now has been seen as unlikely:

  • "Be afraid, be very afraid."
  • "The implications of a yes vote would be huge, and are magnified by the sense of institutional unpreparedness. A 'yes' vote could easily derail the UK economic recovery.
  • Could cause a "destabilizing crisis" in the banking system and at best leave the rest of the UK with an unstable currency union during talks on the new fiscal and monetary arrangement.
  • "There is now no question that the momentum is now all with 'yes'."

  • Near-term consequences of a "Yes" for the Scottish economy, and for the UK more broadly, could be "severely negative". In the long run, "little reason why an independent Scotland could not prosper: there is no evidence to suggest that smaller countries are richer or poorer, on average."
  • Highlights risk that uncertainty over whether an independent Scotland would be able to retain sterling could result in an "EMU-style currency crisis" for the UK.

  • "Significant risk" of bank deposits fleeing Scotland within days of a Yes vote.
  • Investor concerns would likely focus on currency issues, EU membership and future Scottish economic policy. This could deter investment in Scotland from foreign and British companies.
  • The increase in the net debt-to-GDP ratio for the rest of the UK if Scotland refuses to repay its debt is "relatively slight" and potentially a price worth paying for avoiding a dysfunctional monetary union. Scotland would pay more relatively for issuing its own debt as a result.

  • The forex market's single biggest player made sell sterling its trade of the week on Monday. A "Yes" vote could drive the pound to $1.56 or lower.
  • "With the lessons of the euro zone debt crisis still fresh in investors' minds, a currency union (after a "Yes" vote) may weaken sterling in the same way it weakened the euro."
  • Concerned that a Scottish exit will raise the chances of Britain leaving the EU within years.

  • Yes vote would prevent the Bank of England from raising interest rates, encourage "financial fragmentation risks across Europe".
  • Negotiations on debt and North Sea oil to fuel volatility.
  • "Yes" voters tend to underperform their pre-voting polls by a significant margin as minds change in the privacy of the voting booth.
  • Lenders would likely ask for risk premium for borrowing to newly independent nation.

  • A quick 5 percent move, towards the high 0.80s for euro/sterling, is certainly possible after a Yes vote, and, with this, a move to the mid-1.50s against the dollar.

  • Yes vote could knock 10 percent off value of sterling.
  • One of the few banks to focus earlier this year on the potential that Scotland might not take on its portion of UK public debt.
  • Bank's economists chiefly concerned on Monday by the prospect of Scotland being refused EU entry and the rump UK following it out after a 2017 referendum on membership.

  • "Market complacency on Scotland is shattered."
  • Scotland leaving the UK would make the UK leaving the EU considerably more likely, which could reduce potential GDP growth by as much as 0.5 percent per annum.
  • Sterling could drop as much as 5 percent against the dollar after a Yes vote.

  • A transition to other currency arrangements would be complex, with "sterlingisation" or a fixed exchange rate likely to put upward pressure on Scottish interest rates.
  • Still expect downside for the euro against the pound, but it "could be a bumpy descent" into the vote.
  • Scottish bonds could yield between 50 to 150 points more than AAA gilts, depending on how talks on independence pan out.
  • In an "unfriendly outcome" of such talks between London and Edinburgh, the 10-year gilt asset swap could cheapen by 20 basis points, consistent with a 1-notch credit rating downgrade.


  •  "If elevated uncertainty receded fairly swiftly, the effects of any lasting decline in the currency might be the dominant consideration, potentially adding to the case for the BoE to begin raising rates."

Tuesday, August 26, 2014

Space junk deal sees Electro Optic Systems shares rocket more than 30 percent

Shares in a small company that tracks space junk have gone into orbit after it struck a deal with the US defence giant Lockheed Martin.

The strategic partnership announced this morning by Electro Optic Systems will see the development of a tracking centre in Western Australia to detect and monitor 25 percent of all space junk.

The massive problem of space junk was illustrated last year in the film "Gravity".

News of the deal with Lockheed Martin saw E-O-S shares rocket by more than 30 percent.

I spoke with chief executive of E-O-S, Dr Ben Greene, on the The World Today.

Actuaries call for review of retirement income system; worried about limited guidelines for reverse mortgages

The professional body representing actuaries is urging the government's inquiry into the financial system to recommend ways to make retirement income streams work better.

The Actuaries Institute says the current choices for retirees of lump sums, account-based pensions or annuities are not necessarily appropriate given the rapidly ageing population.

The Institute is also worried about the lack of regulatory oversight of reverse mortgages where retirees are able to access the equity in the family home.

Second round submissions to the Financial System Inquiry led by former Future Fund boss David Murray close later today.

Read the FSI's terms of reference which were announced in December last year.

Monday, August 25, 2014

Construction sector plagued by phoenix tax, pay dodges

Some of Australia's biggest construction projects are being probed by regulators in relation to claims of corruption and tax avoidance.

The Australian Tax Office (ATO) and the Australian Securities and Investments Commission (ASIC) are paying special attention to what is known as phoenix activity in the construction sector, where companies go into liquidation to avoid paying entitlements to their staff.

The ATO and ASIC have joined forces with the Fair Work Building and Construction directorate to examine illegal phoenix scams which are costing as much as $3.2 billion per year.

AUDIO: Listen to Peter Ryan's report. (AM)

The investigations will also examine allegations that some scams in the construction industry have links to organised crime.

ASIC commissioner Greg Tanzer told the ABC's AM program that the phoenix activity was focused on "off-the-books" sectors such as transport, security and cleaning services.

"Our intelligence suggests that there's a range of issues that arise in the construction industry," he said.

"What we're finding is that there is a disproportionately large number of cases perhaps because of the nature of the industry and the number of workers involved in those industries but, whatever the reason, it seems to be a target for this type of activity.

"We have found that the construction industry is a particular hotspot for phoenix company activity, and this affects not just the employees in the construction industry who might be affected directly because their superannuation entitlements might not be paid, or their leave entitlements might not be paid.

"But also, critically, other contractors - sub-contractors and sometimes head contractors - are affected by companies going out of business, doing so intentionally with the absolute deliberate intent of defrauding all of those creditors and employees."

Consulting firm PwC, in a study for the Fair Work Commission in 2012, found that illegal phoenix activity costs between $1.2 billion and $3.2 billion per year.

"From our perspective, we see just far too many individual problems that are caused by this type of activity, because it doesn't need to be a large amount of money if you've been gutted out of your leave entitlements or your superannuation entitlements," Mr Tanzer said.

ASIC has commenced a wide ranging program aimed at the construction industry in which 6,000 smaller companies were targeted, and hundreds visited, to be reminded that heavy penalties apply for proven phoenix activity.

Mr Tanzer said the investigations would examine claims that organised crime is involved in construction sector corruption.

"We are concerned that the construction industry in particular seems to be a target for this type of activity and it really can be quite pernicious and cause very serious effects for the employees and the other creditors of companies that phoenix," he added.

Phoenix activity, where a company "rises from the ashes" of liquidation, without paying taxes or entitlements, is constantly in the sights of ASIC and the ATO.

Greg Tanzer told AM that such activity appears to increase during softer economic times, such as those being experienced now.