wallydownundy

This month Australia signed the largest trade deal in its history - a natural gas export contract valued at US$41 billion. The Gorgon Project is being brought to life by Chevron and ExxonMobil. Prime Minister Kevin Rudd said the full project would create 6,000 jobs and cost AU$50 billion. By 2014 when the project is on-line Australia will surpass Qatar as the world’s leading exporter of natural gas. Some economists predict the economic injection of Gorgon Project to exceed the multi-billion Federal intervention in the economy.

It’s great news for the economy - and provides wonderful quotes for politicians:

“This unprecedented export deal confirms Australia’s importance as a global energy superpower supplying vital clean energy resources and technologies to China and our other Asia-Pacific trading partners,” Resources Minister Martin Ferguson said. (Source: Agence France Presse)

It’s also good news for economies in Asia. Australia’s proximity means shorter shipping times and no need to pass through conflict zones in the Middle East. For Australians the sheer scope of the project is hard to fathom. Considering oil and gas analysts also find the scale staggering it is no wonder:

Asian demand for coal and iron ore have helped Australia’s economy avoid recession during the global downturn but State One Stockbroking analyst Peter Kopetz said LNG was the next boom commodity. The gas is liquefied for shipping abroad, where it is turned back into gas and distributed via pipeline.

“The numbers are phenomenal. When you look at them it’s mind-boggling,” he said. “It’s going to be LNG boom times.”

Australia exported 15.2 million tonnes of LNG worth 5.2 billion dollars in 2006, a figure the government estimates will quadruple to 60 million tonnes by 2015 if all currently planned projects proceed. (Source: Agence France Presse)

The challenge remains, though, for politicians and others guiding the economy. With robust growth planned from minerals and now gas, Australia will continue to have a two-gear economy. Our commodity exports will be trebling in volume and value, while the “old economy” of services and manufacturing will fight to stay competitive. With billions pumped into the economy due to gas exports, it will be hard to keep interest rates at reasonable levels.

So while Australia may become “the Middle East of Gas” it doesn’t mean every Aussie will be flying first class to buy the latest season’s clothing at Harrods.

Foreign direct investment (FDI) into Australia continues to grow. “From innovation to a highly educated and multicultural workforce Australia is a globally competitive location for business,” according to Austrade - the Australian government department responsible for attracting investors. Add to that a stable government, secure legal system, great infrastructure, competitive tax environment and high quality of life and you understand why companies want to invest in Australia.

As of 31 December 2008, the stock of inward FDI in Australia was A$392.9 billion. The top four source countries were the United States, the United Kingdom, Japan and the Netherlands. (Source:Austrade)

Australia’s top exports are minerals and resources, and given our location adjacent to Asia Pacific we’ve become a provider of choice for iron ore and other commodities. We are more competitive in terms of shipping times than Canada or Brazil, two significant resource competitors.

Notably absent from the listing of top countries investing in Australia is China. That said there has been no shortage of investments from China, particularly from resource companies. Austrade’s fact sheet on how it helped inward investment into resources has six case studies - four are from China.  

This weekend Aquila Resources announced a $285.6 investment by China’s biggest steelmaker, Baosteel. This follows on the heels from the failed investment bid by Chinalco for US$19.5 billion in Rio Tinto. And while is is reassuring to see nearly $300 million invested by Baosteel, the scale of the failed US$19 billion deal is overwhelming.

It appears small deals are acceptable - but major transactions flounder. Why? Probably because it is not politically acceptable for the Government of Australia to approve large-scale investments by state-run enterprises from China. Australians are scared of China and don’t want their politicians to approve these transactions.

For China the road forward is a long one - but an easy journey is possible. There have always been massive differences between the East and the West. Yet through assimilation and education these differences are better understood. Generally we do not fear what we understand.

While China made a great start with the 2008 Olympics, a wide-scale education and cultural exchange program will help in Australia. That would include the standards of scholarships, cultural exchanges and trade delegations. But the heartland of Australia is large - and not likely to travel to the National Gallery for an exhibition of clay soldiers. Instead greater use of mass media would help - whether it’s the reality series of “Wife Swap” between families in Sichuan and Sylvania Waters or “Super Nanny” takes on spoiled boys in Foshan.

We need to see that the daily struggles and challenges faced by families in Australia and China are the same. Then we can cheer the progress made by the new-found celebrity families from China as they get together to grill bean curd or corn cobs on an Aussie barbecue. Then we’ll know and accept and adore China all the more.

I sure am glad Angela Merkel isn’t Russian. Up for re-election this month, Merkel chose to take time off for a walk through the Tyrol mountains. Heading back to nature is a popular choice for European leaders. In July Russia’s Vladimir Putin went horseback riding and swimming in Siberia. In case you weren’t sure of his viability as a Prime Ministerial candidate in the next election, he issued beefcake photos to showcase his…health.

Before his election, Barack Obama took to the ocean. Subsequent publication of photos swayed a few female (and gay) voters away from Hillary. Result? We’re certain he’s healthy.

So with the leaders of America and Russia as examples, we should have seen official photos to demonstrate Angela Merkel’s health. After all a bracing walk through the Tyrol mountains should have provided plenty of photo opportunities. Yet enter “Merkel Tyrol” into Google image search and you don’t get a photo of Angela and mountains.

Well, let me clarify…

At least we know she’s healthy!

Australian city centres recorded a major jump in vacant office space. Seems those armies of unemployed people are no longer in suits and skirts - nor are they in offices.

I wrote back in May about the issue: Commercial Property: The Other Shoe to Drop. Today writing for “Primespace” in “The Australian” Turi Condon reports a 40% increase in vacant office space. Nationally vacant space went from 5.9% in January to 8.3% in July. And companies are still not done shedding staff.

(BTW, it feels prescient to have used the “other shoe” title - especially when The Economist writing this week uses the exact same analogy in a sub-head for a story on commercial property.)

Commerical rents have plummeted, with drops between 35% to 50% in Brisbane and Perth. Meanwhile new space is coming on the market. In the next 18 months 1.3 million square metres is due to come on market. That’s the equivalent of all the office space in Adelaide.

Prognosticators say commercial property will be in the doldrums for three years. (They also see a tall dark stranger coming into your life, but details will cost you extra.)

In Berlin there’s a novel way to cover over slumping demand. In Potsdamer Platz a half-built office complex is masked by a ten story facade with a picture of a building painted on it. Did you read that correctly? A ten story tall painting!

That’s as good as the service now on offer to Los Angeles suburbanites. If they tire of brown lawns in their housing complex - due to mortgagee reposessions - they can pay $600 to have the grass spray-painted green. Yes - spray paint. Not those fertilised seeds used to start lawns (those require water). This is a quick-fix gloss-over to make your neighbourhood “new car” clean.

So here’s my business idea. Let’s sell cut-outs of busy professionals who can be propped behind vacant desks. We can create tableaux of typical office situations - Fred from accounts checking football scores. Mary in HR talking on the phone (with bonus sound loop of endless chatter!). The logistics department gathered in the boss’ office to settle the Seattle issue. This way today’s office workers won’t feel so lonely in their empty offices.

Who knows - if productivity improves we might lose a model or two to upper management!

Mourning used to be conducted in private. When a loved one died we would retire to the inner most sanctum of our homes for private time with loved ones. When a hard of state or beloved icon died, we might gather at the church or cemetery to pay our respects. Then Diana died and our mourning turned public.

Today that most private of emotions – grief – is on display with vast public outpourings for Michael Jackson.  Record stores have sold out of his music. Producers are rushing a new CD of unreleased music to capture what they call “grief momentum.” Jackson is projected to overtake Elvis’s US$50 million per year in royalties. He’ll be the most lucrative dead star in history.

I can’t help but feel a little odd about all this. It certainly isn’t the first time the public has turned to their wallets to assuage grief. I lived in Hong Kong when Gianni Versace was murdered. All stores around the world were closed, spare the one in Central, Hong Kong. Extra security guards were hired. Velvet ropes kept the crowds in queue. And before lunchtime the entire store was sold out.

I get a little awkward around all this. I am adept when consoling families. But how do you deal with the office receptionist who says she would have stayed home if she’d known Michael was dead? What do you say to the friend wearing a single glove?

Is “Beat It” too blunt?

The Twitter-verse is alive with postings from Iran. With global news agencies blocked from Tehran the world’s exposure to post-election chaos is delivered via Twitter and YouTube. These seem to be the only sites able to escape the tightest Internet filtering system in the world - built by Siemens and Nokia.

If ever there was a public relations nightmare for a company this has to be the daddy of them all.

According to The Wall Street Journal, Iran’s monitoring system is the most sophisticated in the world. It even exceeds the capabilities in China. And it was provided, in part, by European companies Siemens and Nokia:

“The monitoring capability was provided, at least in part, by a joint venture of Siemens AG, the German conglomerate, and NokiaCorp., the Finnish cellphone company, in the second half of 2008, Ben Roome, a spokesman for the joint venture, confirmed.” (Source: The Wall Street Journal)

To be fair the equipment and technology was developed to improve mobile telephone technology in a developing nation. Yet the sophistication of the filtering and blocking system exceeds that of any country in the world. Surely it would have been apparent, at installation, the capabilities could be used for political oppression especially as Iran remains an autocratic state.

I, for one, will be monitoring the response of Siemens and Nokia to these developments.

“I have come here to Cairo to seek a new beginning between the US and Muslims around the world.”
President Barak Hussein Obama in speech at Cairo University - June 2009

Yesterday in Cairo USA President Barack Hussein Obama gave a speech that redefines relations with the Muslim world. Carefully crafted over months - and with input from prominent US Muslims - the speech included a few historic firsts. It was the first time a US President mentioned the state of Palestine. He decried Israeli settlements and called for an end to construction. He reversed US policy developed under Bush that led to resentment and anger: “The cycle of suspicion and discord must end,” he said.

And in his speech Obama became the first US President to quote the Koran, then issued a greeting of peace: “As-salaam alaikum” (peace be with you). And while his speech was important for its location - Egypt is an important US ally - he rightly noted that there is a mosque in every state of the USA.

The speech was broadcast live across the Middle East on television, Internet and covered in numerous social media forums. Obama’s audience includes the world’s 1.5 billion Muslims, leaders of the Arab states, Israeli leaders and people and of course citizens of the United States.

Throughout his campaign Obama was praised for his loquaciousness. He’s a natural orator comfortable behind the lectern. Yet this speech blended brilliant phrases with far-reaching policy. It is a speech that will be studied for years to come.

And of course the critics will be dissecting every word and each nuance of delivery. Closer to the scene locals in Cairo already complained of the street closures and security precautions. One newspaper headline read, “Cairo Closed.”

Remember Keanu Reeves in “The Matrix” and those great scenes where he dodged bullets? If I were any good on Adobe Photoshop I’d touch up this photo and put Kevin Rudd’s photo on the face of Keanu. Today Australia dodged a bigger, nastier bullet - recession.

Based on the volume of exports, Australia avoided recession. I know, I know - that’s unbelievable. In today’s global meltdown for Australia NOT to be in recession is a miracle.

But before we all race along George Street planting “High Fives” on fellow Australians, let’s pause and consider. Unemployment is up. Stores are shuttered. Confidence is shaky.

There used to be a non-alcoholic whisky called Claytons (”The drink you have when you’re not having a drink”). This may not be a recession in pure technical terms - but it’s a Claytons recession.

“Could I try the heart?” asked Canada’s Governor General, Michaelle Jean as she leaned over a dead seal. She was showing her support for the Inuit tradition of seal hunting in the face of an EU ban on seal products. While Inuit cull small numbers of seal using traditional methods, EU members object to the larger-scale killing by commercial hunters of thousands of seal pups.

So after eating some raw seal meat the Governor General tucked into a bite of raw heart. Her verdict? It tastes “like sushi.” She encouraged all Canadians to sample raw seal.

(Side question: Is this now a national duty or merely an invitation? Are Canadians obliged to eat raw seal much like Japanese school children being served whale meat in school canteens?)

During the peak of “Mad Cow” disease (bovine spongiform encephalopathy) brave British politicans were photographed…enjoying a barbequed steak! Nothing could hold these brave men back as they tucked into a prized British export. (”If it’s safe enough for me…”) Eventually England killed 4.4 million head of cattle.

Now Swine Flu is in the headlines. The misnomer is leading to bans on the export of pork. And while world health authorities have changed the name to “H1N1 Virus” it lacks the same pizzaz as “Swine Flu” especially to the readers of The Daily Telegraph.

Today’s cover features “the first family of swine flu” - now under quarantine to stop the spread of the disease (pictured below: John and Fiona Darcy with sons Jarryd and Nicholas - source: The Daily Telepgraph).

My question: Will they put some pork on their fork? Should Kevin Rudd stop by with a take-away serving of Pork Lo Mein?