Let Me Tell You What Is Going To Happen To Qantas....
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No Idea Either,
In my last job, i tried my darnedest to preserve the organisation's "Intellectual proprietorship" and "industrial Advantage" but there were Managers with an agenda that left a lot to be desired.
I give my old organisation 3 years and it will have lost a lot of its market place position.
You sell off your skilled persons advantage, their infinite wisdom and skills and you will pay the penalty.
Mike
In my last job, i tried my darnedest to preserve the organisation's "Intellectual proprietorship" and "industrial Advantage" but there were Managers with an agenda that left a lot to be desired.
I give my old organisation 3 years and it will have lost a lot of its market place position.
You sell off your skilled persons advantage, their infinite wisdom and skills and you will pay the penalty.
Mike
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December 27, 2010
AUSSIE banks, once held up as the envy of the world, are now at the mercy of foreign lenders.
Despite the Federal Government's measures to boost competition in the banking market, little has been done to address the huge reliance on overseas lenders to fund our mortgage market.
Official figures show our banks now owe overseas investors a record $352.7 billion, equivalent to 27 per cent of the country's entire economic output.
The extraordinary figure, contained in data from the Australian Bureau of Statistics, is fuelling concerns Australia's financial system is becoming over-stretched.
Homeowners could be vulnerable to rate hikes both by our banks and the foreign investors that help fund them.
Global fund managers are already getting nervous about Australia's overheating property market - a fact that could lead them to charge a higher interest rate for money they lend to our banks - or withdraw funding all together.
"If the global economy recovers strongly that could push interest rates up a lot, and that's a real risk for Australia's because rates are already high and house prices are becoming an issue," said Trevor Greetham, asset allocation director at Fidelity Investments in the UK, which has $3.4 trillion under management.
Analysts said if Mr Greetham and others like him withdraw funding, then our banking system will be plunged into a catastrophic credit crunch. Mortgages will be rationed, minimum deposit sizes will be forced up and property prices are likely to collapse.
The massive foreign debts have been built up as a result of the unprecedented demand for mortgages over the past two years, largely as a result of the Government's First Home Owners Grant.
The stimulus payments enticed huge numbers of borrowers into the market, and because banks did not have enough money on deposit from domestic customers, they had to turn to overseas lenders.
"Everybody is looking for the first signs that overseas investors have had enough," one banking analyst said.
Gerard Fitzpatrick, global fixed income portfolio manager for Russell Investments, said he was increasingly cautious about lending to Australian banks.
Speaking from London last week, he cited the recent catastrophe in Ireland, where the house price bubble effectively broke the banks.
"I'm not saying Australia is the same as Ireland, but there are definitely similarities," Mr Fitzpatrick said.
"You've had a booming housing sector and rapidly increased lending by banks.
"The two situations have enough in common for bond investors to consider the consequences for the Australian housing market - and the banks that are supporting it."
Foreign lenders get the property jitters | Herald Sun
AUSSIE banks, once held up as the envy of the world, are now at the mercy of foreign lenders.
Despite the Federal Government's measures to boost competition in the banking market, little has been done to address the huge reliance on overseas lenders to fund our mortgage market.
Official figures show our banks now owe overseas investors a record $352.7 billion, equivalent to 27 per cent of the country's entire economic output.
The extraordinary figure, contained in data from the Australian Bureau of Statistics, is fuelling concerns Australia's financial system is becoming over-stretched.
Homeowners could be vulnerable to rate hikes both by our banks and the foreign investors that help fund them.
Global fund managers are already getting nervous about Australia's overheating property market - a fact that could lead them to charge a higher interest rate for money they lend to our banks - or withdraw funding all together.
"If the global economy recovers strongly that could push interest rates up a lot, and that's a real risk for Australia's because rates are already high and house prices are becoming an issue," said Trevor Greetham, asset allocation director at Fidelity Investments in the UK, which has $3.4 trillion under management.
Analysts said if Mr Greetham and others like him withdraw funding, then our banking system will be plunged into a catastrophic credit crunch. Mortgages will be rationed, minimum deposit sizes will be forced up and property prices are likely to collapse.
The massive foreign debts have been built up as a result of the unprecedented demand for mortgages over the past two years, largely as a result of the Government's First Home Owners Grant.
The stimulus payments enticed huge numbers of borrowers into the market, and because banks did not have enough money on deposit from domestic customers, they had to turn to overseas lenders.
"Everybody is looking for the first signs that overseas investors have had enough," one banking analyst said.
Gerard Fitzpatrick, global fixed income portfolio manager for Russell Investments, said he was increasingly cautious about lending to Australian banks.
Speaking from London last week, he cited the recent catastrophe in Ireland, where the house price bubble effectively broke the banks.
"I'm not saying Australia is the same as Ireland, but there are definitely similarities," Mr Fitzpatrick said.
"You've had a booming housing sector and rapidly increased lending by banks.
"The two situations have enough in common for bond investors to consider the consequences for the Australian housing market - and the banks that are supporting it."
Foreign lenders get the property jitters | Herald Sun
Grandpa Aerotart
Was talking to a knowledgeable mate in Oz recently and he told me that at least two Banks. NAB was one and I can't remember which the other was - other than it wasn't my bank, received bail outs from the US Fed at the same time US banks were being bailed out. All kept very hush hush.
These are the same banks that were having a drama a few weeks ago with their ATMs not handing out cash - apparently also EFTPOS transactions were being delayed several days rather than being almost instantaneous.
That sounds like liquidity problems to me.
These are the same banks that were having a drama a few weeks ago with their ATMs not handing out cash - apparently also EFTPOS transactions were being delayed several days rather than being almost instantaneous.
That sounds like liquidity problems to me.
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Chimbu, both Westpac & NAB were bailed out by the FED.
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Correct CC,
NAB and Westpac, as per SMH
NAB, Westpac tapped into US Fed's emergency funds
Things aren't what they seem!
NAB and Westpac, as per SMH
NAB, Westpac tapped into US Fed's emergency funds
Things aren't what they seem!
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Meanwhile I have my home loan rate at 2.9% via a Japanese bank, yes there may be problems re currency rates but I am laughing atm! I have free reign to move at will, tell the rapist Aussie banks to explain their international funding costs? Haha cant meanwhile Aussies get totally raped.
Loving it~!
Loving it~!
Thread Starter
FGD:
1. Outsourcing requires working capital.
2. I was a group general manager in one of the first outsourcing supplier companies.
3. Outsourcing works fine where a vibrant competitive free market for your requirements already exists. Take photocopiers for example. Why would you possibly employ a photocopier mechanic or actually own a photocopier? You have dozens of choices and options in that market.
....however RR Trents are not photocopiers. There is no "competition". Adam Smith will therefore apply, and you will be royally screwed since you have foregone any other option. The "outsourcing" option is therefore entirely artificial. There are not Sixty plus RR Trent overhaul and maintenance companies competing for your business. Maybe there would be for the CFM 56, but I wouldn't know.
You assert that Qantas will go broke because of their prediliction towards outsourcing. You associate outsourcing with debt and it is this debt that you claim will sink Qantas.
The premise of your assertion is flawed, I respectfully suggest. Outsourcing does not require debt. An expense from outsourcing is no different to an expense arising from a function performed internally - the only question is whether you have enough dough to pay for it.
You seem to have a major objection to the idea of outsourcing. Perhaps this is because it wasn't in the widespread use in your day as it is today.
The theory of outsourcing is perfectly sound. It holds that the outsourcing of a particular function will be cheaper than to perform that same function internally.
Whether this is actually true for every application of outsourcing is debateable - as you would appreciate.
The premise of your assertion is flawed, I respectfully suggest. Outsourcing does not require debt. An expense from outsourcing is no different to an expense arising from a function performed internally - the only question is whether you have enough dough to pay for it.
You seem to have a major objection to the idea of outsourcing. Perhaps this is because it wasn't in the widespread use in your day as it is today.
The theory of outsourcing is perfectly sound. It holds that the outsourcing of a particular function will be cheaper than to perform that same function internally.
Whether this is actually true for every application of outsourcing is debateable - as you would appreciate.
2. I was a group general manager in one of the first outsourcing supplier companies.
3. Outsourcing works fine where a vibrant competitive free market for your requirements already exists. Take photocopiers for example. Why would you possibly employ a photocopier mechanic or actually own a photocopier? You have dozens of choices and options in that market.
....however RR Trents are not photocopiers. There is no "competition". Adam Smith will therefore apply, and you will be royally screwed since you have foregone any other option. The "outsourcing" option is therefore entirely artificial. There are not Sixty plus RR Trent overhaul and maintenance companies competing for your business. Maybe there would be for the CFM 56, but I wouldn't know.
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Meanwhile I have my home loan rate at 2.9% via a Japanese bank, yes there may be problems re currency rates but I am laughing atm! I have free reign to move at will, tell the rapist Aussie banks to explain their international funding costs? Haha cant meanwhile Aussies get totally raped.Loving it~!
Your loan structure you quote is likely a component from the current subprime mess. Yes I said current, not past. I tell it the way it is with no government or finance institution spin attached.
Japan has been an economic mess for at least a decade, propped up and kept afloat by all and sundry in an attempt to keep the Yen tangible, but you can't keep up the smoke and mirrors for ever, they are another tangled web ready to unravel.
The crunch will come when Iran convinces KSR to go off script and sign oil deals with major importers priced in yen/euro etc.
Foie Gras - Excellent post.
Australia has at least 3-4 of the most expensive house priced cities in the world. And with no disrespect, Mackay is one of those cities !! Now don't get me wrong, I love Mackay, it is a great place, but as an example only, to have s#itbox fibro shacks valued at plus 600k is ludicrous. For these same houses to be valued higher than houses in Toronto, Sydney, New York and Germany is absolute evidence that Australia is riding a housing bubble that is going to burst leaving a horrendous mess in it's wake. WHen the US subprime imlpoded it took around 1 week for the top end financial institutes to collapse, but hey, no problem, Uncle Sam will print out some extra notes and slap the culprits on the wrist.
I would like to put a wager on the fact that when Australia's bubble bursts ( which will be linked to a catastrophic global collapse) it will take much less than 1 week for the top end to crumble.
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Sunfish,
Could you please tell me when this is likely to happen so that I can put the date in my desk calendar.
I do remember at Uni that one of the lecturers said: "If you can find three economists that can even agree on the day of the week then you are doing well"
Each morning I go out to pick up the paper and look for the man who tolls the bell and yells : " The end is nigh!" But he never seems to come down our street!
Afraid I have heard it all before.
Could you please tell me when this is likely to happen so that I can put the date in my desk calendar.
I do remember at Uni that one of the lecturers said: "If you can find three economists that can even agree on the day of the week then you are doing well"
Each morning I go out to pick up the paper and look for the man who tolls the bell and yells : " The end is nigh!" But he never seems to come down our street!
Afraid I have heard it all before.
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Originally Posted by Arnie E
Isn't it true that if you do something internally you have an asset, but if you outsource you have a debt.
Maybe I am wrong, I am not a financial wizz like some here, it just seems that way to me.
Maybe I am wrong, I am not a financial wizz like some here, it just seems that way to me.Tangible assets are easy - engines, planes, vehicles etc
Intangibles are much harder to define - what is the quantified value of the Qantas brand, what is the value of Intellectual Property etc. Many accounting games get played with this category and it is being tightened up as a result.
Outsourcing is only a debt until it is paid for. Most likely if you are thinking of a longer term contract (eg power by the hour for engines, maintenance services etc) then you're talking about a liability, not a debt.
One of the funny thiongs about the tax system is that outsourcing is a tax deductible immediately upon payment of the invoice, i.e. if I spend $10M a month on power by the hour engines I can claim it as an expense, reduce my profit accordingly and thus pay no tax on $10M of earnings.
On the other hand if I purchase the very same engines for $100M (or whatever) I cannot claim an immediate tax deduction, I must depreciate the engines over a period of time (whatever the appropriate schedule determines the usable life of the engine to be).
And that is one of the clear benefits of outsourcing, you get an immediate tax "refund" on your monthly spend without having to outlay all the cash for the engine either. So you theoretically have an extra $100M of cash flow in your pocket which means no borrowing costs (interest plus opportunity cost more or less = weighted cost of capital) etc. You also don't have the cost of all those pesky things associated with maintaining the engines such as engineers, tools, facilities, and associated costs such as staff travel, training, most of the compliance and QA work (beyond minimal external audit requirements), OH&S issues, greedy landlords etc.
Everything gets wrapped up into a nice easy invoice which means all your admin costs are minimised as well, you get rid fo everyone and replace them with a mid level (at best) manager who is called a "contract administrator" or somesuch.
Outsourcing has a lot of financial benefits, but the cost is almost always operational. You lose control of your operations, after all, that's exactly what outsourcing is. You can audit and have technical staff there but that's about it. For one of the worst scenarios in outsorucing refer to the 787 program. If that had worked it would have been brilliant but somehow it has become such a clusterf*ck that Boeing don't really know when they'll be in production. If you want to see outsourcing at its best look at Mazda at their prime, basically they counted the number of vehicles that rolled off the production line and paid each of their suppliers based on that. If 20,000 cars were produced then they paid for 100,000 tyres, no more no less as the supplier knew exactly what they had to deliver in what timeframe and order and it worked wonders.
So the benefits are there but they can be damn hard to realise in actuality because the bean counters have to realise that cost minimisation does not equate to overall optimisation.
Hope that helps
R
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Originally Posted by AoA
Meanwhile I have my home loan rate at 2.9% via a Japanese bank, yes there may be problems re currency rates but I am laughing atm! I have free reign to move at will, tell the rapist Aussie banks to explain their international funding costs? Haha cant meanwhile Aussies get totally raped.
Loving it~!
Loving it~!
Of course, if you borrowed when it was low (say 66c to make the maths easy) then you're in real superbonus territory as each $1 pays back 33c more, a 50% win.
If it goes the other way and you've recently borrowed with the strong Aus$ and it reverts to 66c then no manner of interest rate savings will cover your loss.
Either way, hope it works out well for you!
R
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"already getting nervous about Australia's overheating property market"
and that my friends is the major problem with Australias economy!!!
Get rid of negative gearing for residential property and the property pricing market will collapse.....as it should.
The rest is just guff!
and that my friends is the major problem with Australias economy!!!
Get rid of negative gearing for residential property and the property pricing market will collapse.....as it should.
The rest is just guff!
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Originally Posted by gadrivr
Get rid of negative gearing for residential property and the property pricing market will collapse.....as it should.
Removing neegative gearing sounds like a good idea from a certain perspective, teh reality is somewhat different.
And if you like the thought of a collapsing property market how would you feel about collapsing Australian wages?
Or is it only collapses in your favour that you like?
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The Australian property market is due for a 'correction' as it is still overvalued.
While it was never as much a bubble as say the Irish, it is still overpriced now especially when compared to the US.
Thread relevancy: It will be going the way of the Qantas shareprice.
While it was never as much a bubble as say the Irish, it is still overpriced now especially when compared to the US.
Thread relevancy: It will be going the way of the Qantas shareprice.
Thread Starter
"Everybody is looking for the first signs that overseas investors have had enough," one banking analyst said.
Gerard Fitzpatrick, global fixed income portfolio manager for Russell Investments, said he was increasingly cautious about lending to Australian banks.
Speaking from London last week, he cited the recent catastrophe in Ireland, where the house price bubble effectively broke the banks.
"I'm not saying Australia is the same as Ireland, but there are definitely similarities," Mr Fitzpatrick said.
"You've had a booming housing sector and rapidly increased lending by banks.
"The two situations have enough in common for bond investors to consider the consequences for the Australian housing market - and the banks that are supporting it."
Gerard Fitzpatrick, global fixed income portfolio manager for Russell Investments, said he was increasingly cautious about lending to Australian banks.
Speaking from London last week, he cited the recent catastrophe in Ireland, where the house price bubble effectively broke the banks.
"I'm not saying Australia is the same as Ireland, but there are definitely similarities," Mr Fitzpatrick said.
"You've had a booming housing sector and rapidly increased lending by banks.
"The two situations have enough in common for bond investors to consider the consequences for the Australian housing market - and the banks that are supporting it."
Be aware that if the banker boyz in New York and London see an opportunity to short the Oz dollar and then talk its value down, they will take it in a heartbeat. This is a game to them and it makes them hundreds of millions of dollars if they can get it right.
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Originally Posted by sunfish
Be aware that this is "financial pornography". It is also possible that the author of the statements has an interest in seeing the Australian dollar decline in value.
Be aware that if the banker boyz in New York and London see an opportunity to short the Oz dollar and then talk its value down, they will take it in a heartbeat. This is a game to them and it makes them hundreds of millions of dollars if they can get it right.
Be aware that if the banker boyz in New York and London see an opportunity to short the Oz dollar and then talk its value down, they will take it in a heartbeat. This is a game to them and it makes them hundreds of millions of dollars if they can get it right.
Absolutely. Although I must also add that, just like interest rates where people had the option to lock in cheaper fixed rates, people and companies will have no right to complain if they do not take action based on the current strength of the Aus$. It may appreciate somewhat but the odds, in my opinin, are now on the Aus$ declining over the medium to longer term if not before. We all have the opportunity to buy stuff online or from the US, once our dollar declines and we get slugged with foreign exchange rate price rises there's going to be a LOT of unhappy people bceause we will have destroyed large sectors of our economy by purchasing from OS and putting our people out of business.
I'm not legally allowed to give financial advice, I would suggest to anyone considering investing that they should see their professional advisor. But if you can lock in longer term payments in US$ right now then that MIGHT be a good strategy. I'm looking to buy properties with a very high (in Australian terms) rental yields. Here in Aus we negatively gear investment property i.e. we take a tax loss during ownership whilst allowing a capital gain to occur, in the US there's the option of positively geared property which pays more in rent than the mortgage costs, but you need the security to back it up. Longer term that could provide a good source of US$ income when the world settles back down to a more natural order.
R
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Yep, as with all investments it is important to do good due diligence. If it was as easy as plonking down cash and getting 20% return then there would be a stampede. If you're going down the US property path (and bear in mind the key point was to get a natural hedge against Aus$ depreciation) then most of them seem to have 4 key areas they market and it doesn't take too much to figure out where are "bad" areas and where there are "reasonable" areas.
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