By the time that the NBN broadband rollout is completed, all the fibre optic cables will be good for is dog leashes! It will be obsolete technology long ago!

Very few are arguing about the merits of having broadband but fewer people are seeing the practical realities of the time taken to produce the NBN broadband rollout. They are talking 8 years? Seriously! Technology will have bypassed the need for fibre optics well before the rollout is completed.

In 1910 my father used take 3 days to do the family shopping, as he lived 65 kilometres from town. He used take one day to travel to town by sulky, the second day was for shopping and the third day he would return home! But within the space of 50 years he saw a man put on the moon in 1969. He flew regularly on airlines, had colour TV, and UHF radio too. That is how quickly technological advances happened. And now they are happening even faster.

Just think of these technological advances!

• The fist fax machine was seen in 1984
• Mobile phones were introduced 20 years ago
• Twitter wasn’t heard of until three years ago
• iPhones , Blackberrys, iPads you name it, are popping up every day

From the speed of change it can be concluded that NBN broadband will never be built!?

It is time both sides of politics admitted the folly about NBN broadband rollout instead of talking about the cost or the kilobytes all the time!

Who can predict what technology will be doing in 8 years? Who can predict what it will be doing in 8 months, 8 weeks or for that matter 8 days?

NBN broadband rollout is a pipedream just like the story about the King’s Clothes (se link below)  And just like the King and his subjects, we are deluding ourselves, talking up the virtues of NBN broadband rollout because we don’t want to admit  to ourselves that the rollout is pure fantasy.

Jim Gleeson

www.wiseheads.com.au

Would anybody in their right mind shut a fox in the same pen as poultry and expect that somehow or other they would co-exist? Well that’s what politicians have asked us to do, and they are surprised when there is a hung parliament! Is it because they think we are idiots and take us as fools?

Ross Gittins (page 17, SMH 8/9/2010) muses that politicians are not believed or respected any more and that is part of the complex Federal Election problem we have had and it is reflected in the result.

I agree that politicians are regarded very lowly and a large slice of it is of their own making.

For everyone else but politicians, wherever one goes or whatever one does is constrained by legislation But it is these same politicians who have legislated this “consumerism gone mad” environment.

So why don’t politicians set the community an example by being exemplary citizens instead of living by the mantra “do as I say, not as I do”

Politicians work under legislation which specifically says that they are not expected to tell the truth in advertising or cannot be sued for their actions or inactions. I don’t pretend to be a lawyer but check out part of the legislation which politicians work under

“Do election advertisements have to be authorised?

Yes. Section 328 (1) of the Commonwealth Electoral Act 1918 (CEA) requires all electoral advertisements to include the name and address of the person who authorised the advertisement and, except in the case of newspapers, the name and place of business of the printer at the end.

Electoral advertisements must be authorised at all times, and not just during an election period. The Australian Parliament has determined that the Act should not regulate the content of political messages contained in electoral advertising; rather, the intent of the Act is to ensure electors are informed about the source of political advertising, and to ensure that political advertising does not mislead or deceive electors about the way in which a vote must be cast.

Accordingly, the AEC has no role or responsibility in deciding whether political messages published or broadcast in relation to a federal election are true or untrue.”

What an indictment? The politicians aren’t required to tell the truth! It is enshrined in law that the Act accepts that they tell lies!

Yet, check consumer laws, financial planning regulations, the Corporations Act in regard to a Prospectus and the biggy of them all the Trade Practices Act.

Every sort of citizen except politicians (when they are acting as politicians) are required to be squeaky clean!

You know the saying “if you tell a lie often enough we believe it to be true!” That is until we realise that we have been taken for a ride. No wonder we despise politicians!

Read more articles by Jim Gleeson

Have you ever wondered what the Reserve Bank of Australia (RBA) is doing when they increase interest rates?

The bottom line, to use a catchphrase, is that every type of investment is related to the cash rate set by the RBA.

To make a very simplistic observation the interest rate which the RBA sets is a tool which is used to fine tune investments and therefore the flow of cash from one sector of the economy to another. In any economy the flow of cash dictates the movement into or out of investments. For example, to housing, to shares, IBD’s, superannuation

Currently the RBA has set the cash rate at 4.5% which means that by putting cash into a savings account, at simple interest it would take 22.22 years (100/4.5=22.22) to double in value. That figure of 22.22 is the P E ratio for cash at the RBA rate.

The P E ratio equates to the number of years that it will take to repay the capital, without taking into account growth or inflation.

If you shop around and receive say 5.4% interest then the P E ratio will be 18.52 (100/ 5.4= 18.52).

Why do other institutions offer more than the RBA cash rate? They know that there has to be an incentive for you to move money to them and they can use this money to invest to make a profit.

For shares there is the factor of dividend yield to repay purchase price. A share with a P E ratio of 16 would be paying a dividend yield of 6.25% (100/6.25 = 16)

So an investment with a P E of 16(years) is much better than one with a P E of 22.22(years). But then you have to weigh up the risks and consider your personal circumstances.

As I said this is a very simplistic explanation. In reality such factors as the risk of investment, income tax, currency movements and inflation will also be considered before there is a decision to invest.

This is how the RBA is able to control inflation by encouraging or restricting the flow of money to a particular investment sector.

If you have further questions or comments contact the author Jim Gleeson

Deciphering Political Speak laced with Financial Jargon

The jargon in the recent Australian Federal Budget is very confusing, isn’t it?
• The Government is saying that they predict that the budget will be in surplus in three years time.

Whereas
• The Opposition is saying that it is impossible to have the budget ‘back in the black’ by then.

Incidentally, both are correct in their assertions, but they are talking about two entirely different set of circumstances. The Government in referring to ‘the budget’ is actually talking about a Trading Account whereas the Opposition in talking about ‘the budget’ is talking about a Balance Sheet. Both are vitally important in any business and it is for this reason that a lender will ask for both, as to only see one or the other gives a distorted view of an enterprise.

The Federal Government is actually saying that their Trading Account will show a profit in three years time whilst the Opposition is saying that this profit will not be enough to repair the Balance Sheet and put it ‘back in the black’ by repaying over $100 billion in debt by then.

Examples of Jargon Confusion from Tuesday 11th May 2010

The Australian Government was saying two things in their budget comments

1. The budget will be in surplus in three years time
2. The budget will return to surplus by then because of higher tax revenues

Of course they are talking a yearly budget or annual budget which could be described as a *Trading Account.

The Australian Opposition is saying in response
• The budget cannot possibly be ‘in the black’ in three years
• That any surplus from the budget will only repay a fraction of the Australian Debt.

But they are talking **Balance Sheet .

As I said earlier both are correct because they are talking about entirely different things that sound the same.

Why couldn’t they just say that?

Jargon definitions.
* A budget is a tool to predict with reasonable accuracy whether the enterprise will result in a profit, a loss or will break-even A budget is often compiled annually and called a Trading Account.
**A Balance Sheet is a summary of financial balances (including debts not yet due). A balance sheet is often described as a “snapshot of financial conditions “.

These comments are sparked by last night’s Australian Federal Budget and are not politically motivated and only comment on the financial jargon used.

by Jim Gleeson