Germany thrust into debt crisis focus after "disastrous" bond auction raises fear factor

There are disturbing signs this morning that Germany is being dragged into the Europe's worsening debt crisis.

The economic powerhouse has failed to convince some global investors that unlike other parts of the Eurozone, German government debt is a safe enough bet.

Today's auction of ten year German bonds left risk takers cold and since has been described as "disastrous" after 35 percent was left unsold.

The fear factor relating to all things European means that even quality German debt now has a guilt by association with struggling economies like Portugal, Italy, Ireland, Greece, Spain - the much feared PIIGS.

Not surprisingly, Investors are acting first and asking questions later. Right now, it's looking like much later.

And one big albeit distance question is whether the PIIGS acronym might soon be joined by another "g".

Here's my take from this morning's edition of "AM".

Read my piece on The Drum and debate Europe continues to provoke.

Gunns insider case a test for corporate cop

By Business editor Peter Ryan - analysis

Former Gunns chairman John Gay is due to face court in Launceston next month on charges of insider trading.

The allegations - if proven - would be an important victory for the corporate regulator as watchdogs around the world crack down on white-collar crime.

The Australian Securities and Investments Commission (ASIC) is alleging that Mr Gay, while chairman of Gunns, used insider information to profit from a personal share transaction - information that he knew was not available to the general public.

But insider trading cases are notoriously difficult to proven and Mr Gay is certain to mount a vigorous defence.

Here's my analysis broadcast on "The World Today" and read it on ABC News Online.

Qantas dispute goes to industrial umpire, but Alan Joyce denies "mission accomplished".

The industrial umpire will impose a final solution in the dispute between Qantas and three key unions after negotiations broke down well ahead of the deadline for a peace deal.

The impasse has been referred to Fair Work Australia but an outcome could be months away, perhaps well into the new year.

But despite a narrowing of the issues, deep divisions and bitterness remains.

The Transport Workers Union, which represents baggage handlers, has accused Qantas of wrecking the negotiations in order to force the dispute to binding arbitration.

But Qantas denies it stonewalled negotiations to get the result it wanted all along.

Listen to both sides - Mick Pieri from the TWU and Qantas chief executive Alan Joyce.

Here's the extended version of my interview with Alan Joyce.

Europe's welfare state to make way for austerity as debt crisis threatens to revive nationalism

By Business editor Peter Ryan - analysis

Europe's welfare state is almost certain to be slashed or even destroyed as taxpayers pay the price for the deepening sovereign debt crisis.

The austerity bill is likely to include deep cuts to social welfare programs created in the wake of World War 2 and expanded through the introduction of the European Union.

While banks endure heavy losses from their exposure to sovereign debt, taxpayers in the Eurozone - especially those from the baby boomer generation - are bracing for increased retirement ages, cuts to free education and stricter guidelines around universal health coverage.

There are already signs of protectionism and nationalism in some struggling economies as voices from right wing splinter groups seize on deepening community unrest.

I discussed the possible end of the welfare state during a recent visit to Brussels with economist Hans Martens, chief executive of the European Policy Centre. 

Read my article posted on The Drum.

Note: I travelled to Brussels as a guest of the European Commission.

EU economic recovery stalls; growth forecasts point to deep recession

The first line of the European Commission's press release was stark and scary.

"The recovery of the EU economy has stopped."

The impact of deepening fear and suspicion in the Commission's Autumn forecasts for 2011-13 reveal that "growth is at a standstill"  - perhaps the best case scenario given the deepening sovereign debt woes.

Growth is projected to stagnate well into 2012 and is expected to flatline at just 0.5 percent over the full year.

The best outlook is a return to slow growth of just 1.5 percent by 2013.

The uncertainty and outright fear engulfing Europe is now hitting investment and consumption while weakening global growth is holding back exports.

I outlined the impact of EU stagnation on the rest of the world on 11 November, when I spoke from Brussels to the AM program.

Later in the day, I updated the deepening crisis in Italy and the potential for severe consequences of a Eurozone breakup in this interview with "The World" on ABC News 24.

Note: I was in Brussels on a journalist study tour hosted by the European Commission.

Outright fear as Italy takes debt crisis to flashpoint

The departure of Italy's flamboyant Prime Minister Silvio Berlusconi is one small but important factor that has given global investors a brief moment of relief.

But in the leadup to the appointment of a new government lead by Mario Monti -a highly regarded former European Commissioner - there was outright fear that Italy's economy would implode under the pressure of borrowing costs in excess of seven percent.

I was in Brussels last week as a guest of the European Commission, and witnessed the heightening fears of cascading defaults if Europe's third biggest economy collapsed.

Here's my analysis broadcast on the 10 November edition of the ABC's AM program.

Europe faces modern Greek tragedy

By Business editor Peter Ryan - analysis

The possibility has loomed large for more than a year, but now Greece's exit or expulsion from the Eurozone is a real likelihood.

The warning from France and Germany that Greece will not receive another cent in European aid until the referendum is decided has dramatically raised the stakes in Europe's debt crisis.

If Greek taxpayers reject the second bailout plan approved by Eurozone leaders last week, the much feared scenario of a disorderly default by Greece appears certain.

But a Greek default would not be an isolated financial event for a struggling but small economy.

It has the real potential to trigger what Eurozone leaders have feared all along - cascading defaults by Portugal and Ireland which are also struggling to contain taxpayer anger from deepening austerity.

Why wouldn't taxpayers in Portugal and Ireland ask "why not us too"?

Read more on "The Drum" about the deepening crisis for Europe and what a moment of truth could unfold.

Analysis - Qantas reputation grounded as PM signals implications for national economy

By Business editor Peter Ryan – analysis

Alan Joyce’s decision to ground the entire Qantas fleet is already costing the airline tens of millions of dollars but the reputational and brand damage is much greater.

Trust, certainty and confidence in Qantas has been eroded on all levels and the only unified support appears to be from the Qantas board which signed off on the extraordinary action yesterday morning.

Alan Joyce defended his decision when I spoke with him on a special edition of AM.

Here's my analysis running on ABC News Online.

The dramatic escalation prompted anger from the Transport Minister Anthony Albanese about a lack of consultation before the grounding was announced fuelling the perception that the decision was premeditated.

The Assistant Treasurer Bill Shorten summed up the government's view on what might be a shakey government relations strategy from Qantas when he spoke to Barrie Cassidy on Insiders.

But the depth of the crisis was summed up by the Prime Minister Julia Gillard who said the new flashpoint had “implications for the national economy”.

“Implications” could well be an understatement by a Prime Minister remaining calm under immense pressure.

On its own, the prospect of Qantas in accelerating revenue decline has the potential to slice into economic growth at a time when state and territory economies are operating at multiple speeds.

But consider the potential impact on tourism (already struggling from a high Australian dollar), and the reluctance of visitors and travelling Australians to consider Qantas as a reliable carrier.

Qantas says domestic travellers are switching to competitors like Virgin Australia, accounting for a 20 percent decline in revenue. Virgin has jumped on the escalation, ensuring it doesn’t waste a crisis.

The impact, however, could go much deeper.

Consider the hotel bookings being cancelled or rescheduled. Will this add uncertainty for casual or part time staff who rely on hospitality for their livelihoods?

Retailers and cafes based at major Qantas terminals had plenty of bumped customers late yesterday.

But the demand for lattes, muffins and toasted sandwiches is about to disappear with flights grounded and booked passengers told not to turn up.

Taxis, car hire, buses – even the supervisor at the taxi rank – will see the reason for operating at Qantas terminals disappearing.

The list goes on.

Then there’s increasing scrutiny of Alan Joyce’s $5 million pay delayed approved by shareholders on Friday.

Even with a 71 percent increase, Mr Joyce is a discount chief executive compared the $10 million his successor Geoff Dixon received in his final year.

But taking a significant pay increase while asking unions to compromise and to trade in traditional terms and conditions is raising the cynicism stakes with the government and general community.

Qantas, until now, was an iconic global brand known for safety, reliability, and above all trust.

But as the saying goes, a reputation is built up over decades and lost in a day.

That day has arrived and regardless of any breakthrough, Qantas for many is now just another airline trying to survive in a globalised world.

Listen to the full interview with Alan Joyce here.

Tycoon James Packer defends his gaming interests and attacks the personal nature of the pokies debate

James Packer is known to be media shy but like his late father Kerry, he comes out fighting when his interests are under attack.

The gambling tycoon defended his business interests in this rare interview with 3AW's Neil Mitchell.

Qantas boss stays the course as unions vow to fight on

Qantas chief executive Alan Joyce has used the airline's annual general meeting in Sydney to warn unions he will not give in to their demands.

But as anticipated, the airline's board faced tough questions from angry shareholders and union representatives.

I spoke with Alan Joyce on AM a few hours before he faced a fiery annual meeting.

My colleague Emily Bourke attended the meeting and outlined the issues and the raw emotions when she spoke to The World Today.

A pay rise for Mr Joyce was approved in a vote amid jeers from small shareholders, union representatives and the airline's pilots.

Angry investors demanded to know why Mr Joyce and the company's executive directors deserved a pay rise.

The Australian Shareholders' Association calculated that in the last five years executive pay at the airline had continued to rise despite the company's share price falling 65 per cent and dividends from 36 cents to zero.

The chairman of Qantas' remuneration board, James Strong, defended the pay and denied that Mr Joyce would receive a 71 per cent pay increase.

He said it was much less than the $5 million reported.

NAB posts record $5.21 billion annual profit after breakup with banking club. But will the "peoples' bank" pass on rate cut if RBA acts on Melbourne Cup Day?

The National Australia Bank has posted a record full-year net profit of $5.21 billion after strong gains in its personal and business banking divisions.

The 23.6 per cent improvement in the year to 30 September comes two years after the NAB announced a campaign to split with its traditional "big four" rivals.

Here's my analysis of the "peoples' bank" result post divorce from the Big Four club, broadcast on The World Today.

NAB remains Australia’s fourth biggest bank by market capitalisation, behind the Commonwealth, Westpac and ANZ.

The bank’s preferred measure of cash earnings also set a new record of $5.46 billion for the year, up 19.2 per cent.

In addition to a 5.7 per cent increase in revenue driven by business and personal banking, NAB’s charges for bad and doubtful debts was down $441 million to $1.81 billion.

The bank’s mortgage book also improved, growing at more than three times the rate of the banking industry.

Despite this NAB chief executive Cameron Clyne would not commit to passing on an official interest rate cut if the Reserve Bank of Australia decided to cut official interest rates next week.

"We don't give a forward looking view on interest rates or speculate on what the Reserve Bank might do," he said.

Soft inflation result heightens chance of Melbourne Cup rate cut

An interest rate cut on Melbourne Cup day is shaping up as a slightly safer bet after the official reading of inflation came in softer than expected.

Listen to my analysis broadcast on The World Today.

The all important figure for underlying inflation came in lower than economists had forecast at 0.3 percent in the September quarter.

One of the Reserve Bank's preferred measures, the trimmed mean, came in at an annualised 2.3 percent, close to the bottom of the RBA's target band.

According to the ABS, headline consumer inflation was in line with forecasts, posting a 0.6 percent increase in the quarter and 3.5 percent over the year.

Read the statement from the Australian Bureau of Statistics.

When the RBA board meets next Tuesday the option of a 0.25 percent cut to 4.5 percent will be at the top of the agenda.

Apart from inflation, the Board will reassess the deepening debt crisis in Europe which could be at a dangerous new level if Eurozone leaders are unable to agree on a comprehensive solution.

RBA inflation hawk Battellino signals chance of rate cut on Melbourne Cup Day but warns coming mining boom needs to be managed

The Reserve Bank has signalled once again that tomorrow's official inflation result could be the trigger for an interest rate cut on Melbourne Cup Day.

The RBA's deputy governor Ric Battellino says the recent updated outlook makes inflation less concerning while the debt crisis in Europe remains the big global fear.

But Mr Battelino has warned the central bank is still on inflation watch as it waits for the pressures from the next mining boom to hit.

Read Ric Battellino's speech delivered in Sydney this morning.

Read my story on ABC News Online and listen to my analysis of Mr Battellino's comments broadcast on The World Today.

Here's the RBA's cash rate target going back to January 1990.

Mr Battellino, like all economists, will be anticipating tomorrow's consumer inflation data from the ABS to determine whether there is a case to cut the cash rate to 4.5 percent or to sit back and wait for more information.

Most economists believe inflation for the September quarter will be noticably lower. But the Reserve Bank but will need to see underlying inflation at or below 0.6 percent on the quarter or 2.6 percent year on year.

But Mr Battellino, who is regarded as an inflation hawk, says he does see inflation as "less concerning".

On the world's biggest worry - the debt crisis in Europe - he believes it is possible that the global economy could take a sharp turn for the worse, making the point that the situation in Europe is "particularly disturbing".

However, Mr Battellino said recent economic data has been better than expected given that the jobless rate for September unexpectedly fell from 5.3 to 5.2 percent.
 

Depression fears grow as Europe debt crisis deepens; Towers Watson puts the D word at the top of its fifteen extreme global risks

The almost daily indecision on how to solve Europe's debt crisis and the growing hostility between some Eurozone leaders now has some economists talking openly about a Depression.

The global pension fund advisor Towers Watson has put a Depression sparked by Europe at the top of the fifteen risks confronting the world.

The second biggest risk is catastrophic debt default by a major developed economy, a banking crisis and a breakup of the single Euro currenency.

I spoke with Towers Watson's head of global investment Roger Urwin on this morning's edition of AM.

Read the Towers Watson report which outlines the entire fifteen risks here.

Global jitters back on reality check that EU leaders won't agree on bailout deal at weekend meeting; Australian investors also spooked

A workable solution to Europe's deepening debt crisis is looking even more remote today.

Plans to tackle what threatens to become a fully blown banking crisis have stalled after a new split emerged between France and Germany on how to operate the European bailout fund.

Here's my analysis from this morning's edition of AM.

Despite an ultimatum from the G20 that EU leaders agree on a solution, this weekend's meeting has gone from "make or break to "deadlock".

In the meantime, uncertainty remains about the level of financial firepower needed to prevent a potential cascade of sovereign defaults that could engulf Europe's debt exposed banking system

Reserve Bank signals rate cut - if inflation behaves.

By Business editor Peter Ryan - analysis

The Reserve Bank has signalled that next week’s highly anticipated consumer inflation data could be the trigger for cutting the official interest rate.

In the minutes from its September meeting, the RBA board noted that the latest data shows the pickup in underlying inflation had been “more gradual than initially indicated” suggesting the medium term outlook for inflation will be comfortably between the 2 and 3 percent target band.

Listen to my analysis broadcast on The World Today.

Read my story on ABC News Online.

The Board indicated the case for a rate cut from the current 4.75 percent on Melbourne Cup Day was getting stronger given the subdued local economy outside of mining.

“An improved inflation outlook, if confirmed by further data, would increase the scope for monetary policy to provide some support to demand, should that prove necessary,” the Minutes said.

The mood for a rate cut has been fuelled by a recent revision to measures of underlying inflation by the Australian Bureau of Statistics (ABS) which reduces annual inflation from 2.7 percent to 2.5 percent.

Most economists agree consumer inflation data for the September quarter, to be released on October 26, will be a critical factor in the RBA’s November meeting.

The minutes also note eased financial conditions, a softening labour market and a lowering of fixed interest rates for some home loans as additional signs of an economy under pressure.

The RBA board also underscored the uncertainty on global financial markets, reflecting concerns about a possible Greek debt default and concerns about the stability of Europe’s banking system.

“Reflecting these developments, share prices of financial institutions, particularly those in Europe, had fallen significantly and had been extremely volatile.

“At one stage, the share prices of the three largest French banks had fallen by more than 30 percent in the month, to be 75-90 percent below their pre-crisis levels.”

However, the RBA remains confident about the health of the Australian banking system, despite volatility for share prices, exchange rates and bonds.

“Domestic banks remain well positioned to withstand a further period of dislocation, with deposit growth continuing to outpace lending growth.

“Australian banks continued to have good access to short term markets onshore and offshore."

However as a result of global and local conditions and low yields on bonds, markets are optimistic about an easing: “there was an expectation that the cash rate would be reduced significantly by the end of next year.”

The RBA has also confirmed the Australian consumer remains cautious, with varying economic conditions – the two speed economy – complicating the task of assessing the strength of the overall economy.

The Reserve Bank board meets on November 1, Melbourne Cup Day, a year after rates were increased to the current 4.75 percent.

Fear returns as Germany warns of "no miracle cure" for Europe debt crisis

Global stocks have taken a hit this morning after Germany's finance minister warned there'd be no miracle cure for Europe's debt crisis.

The comments have dampened hopes that Eurozone leaders will hammer out a comprehensive solution when they meet at the weekend.

The reality check pushed investors back to the sidelines, and the Australian dollar also fell.

Worried investors have been grasping at any sign of optimism that Eurozone leaders might get their acts together especially after the German chancellor Angela Merkel and French President Nicolas Sarkozy said the weekend summit would offer a comprehensive solution

But this morning, Germany's finance minister Wolfgang Schaeuble said while there would be a five point plan, no one should expect a miracle cure or a definitive solution

That's done nothing to ease concerns about European banks, as a result stocks fell around 1.6 percent across Europe

The renewed fear saw investors dump the Australian dollar from last night's high of 103.7 US cents to a low of 101.49 US cents this morning.

Companies on notice over director pay as shareholders test new veto power in hot AGM season

Shareholders in Australia now have new powers to oppose what they see as excessive pay increases for senior executives and non-executive directors.

The first sign of the new regime may be seen when the annual general meeting (AGM) season kicks off this week.

Under new laws, company directors have to face re-election if more than 25 per cent of shareholders reject a remuneration report for two years in a row.

This new power came after some large parachutes for executives who failed to keep shareholders happy. Former Telstra CEO Sol Trujillo is one example cited after he left the telco after an unpopular tenure with $30 million in entitlements.

Now both retail and institutional shareholders will have real powers to punish boards who misjudge public and investor sentiment, by vetoing a remuneration report.

Until now, such votes have not been binding.

I spoke with Vas Kolesnikoff, chief executive of the Australian Shareholders' Association, on this morning's edition of AM.

He told me it's a brand new day for corporate accountability.

Midmarket companies - Australia's trillion dollar sector - best placed amid global uncertainty. Also unfazed about carbon tax fallout.

Much of the current debate on Australia's two (on indeed multi) speed economy more often than not focusses on challenges facing big business and minnow sized small companies.

But in the face of global and local uncertainty, the companies in the middle - known as the midmarket sector - appear to be best placed to withstand any fallout from Europe's debt crisis.

According to a report by GE Capital, Australia's midmarket companies turn over more than a trillion dollars a year contributing more than three million jobs.

And despite the current emotional debate in some quarters, most mimarket companies are also unfazed by the carbon tax and instead see it as an opportunity.

I spoke with GE Capital's managing director in Australia and New Zealand, Skander Malcolm, in this interview aired on AM. 

Telstra signals $11 billion deal with NBN could hold future of ailing share price.

Telstra's chief executive David Thodey has signalled that next week's shareholder vote on the $11 billion compensation deal with the National Broadband Network will be critical to reviving the company's ailing share price.

In an interview with the ABC's "PM" program, Mr Thodey told me that in addition to providing greater investor and regulatory certainty, a successful vote at Telstra's annual general meeting would improve the telco's all important fixed-line revenue.

While Mr Thodey is confident of approval, he says there are shareholder concerns about regulation and what could happen with a change of government.

Mr Thodey also said progress was being made with Telstra's poor customer service record, and that complaints to the telecommunications ombudsman had halved over the past year.

Telstra shares closed slightly weaker today at $3.07 a share.

Read my story on ABC News Online.

Wall Street hedge fund tycoon Rajaratnam sentenced to 11 years prison

A Wall Street tycoon at the centre of America's biggest insider trading scandal in a generation has been sentenced to eleven years in prison.

The billionaire hedge fund manager Raj Rajaratnam was also fined US$10 million for using inside information to reel in 64 million dollars over seven years.

Prosecutors had argued for an even tougher sentence of 19 and a half years while others say corporate greed will always be hard to deter.

But will this make a difference to temptations and greed on Wall Street?

Here's my take from this morning's edition of AM.

Unemployment in surprise fall; doubts raised over Melbourne Cup Day rate cut

There's been a surprise fall in Australia's unemployment rate, casting doubt on forecasts for an interest rate cut on Melbourne Cup Day.

The jobless rate dipped slightly to 5.2 percent last month as employers took on twice as many new workers than anticipated. Economists has forecast a steady jobless rate of 5.3 percent.

Job creation beat expectations to 20,400 new job in September - 10,800 of them full time.

Listen to my analysis broadcast on The World Today.

The likelihood of a rate cut in November is now dependent on the next official inflation reading due in a fortnight's time.

Here's the official outcome from the Australian Bureau of Statistics.

Tourism Australia steps up campaign to repair image problem with India after damage from student bashings

By Business editor Peter Ryan
　
Tourism Australia will today step up its campaign to target and attract high spending visitors from India.

The move is designed to capture the subcontinent's lucrative tourism market which has been damaged by violent attacks on Indian students in recent years.

Repairing Australia's image problem with India is just one challenge on top of concerns about outdated properties in and an advertising strategy that is failing to make an impact in booming Asia.

Tourism Australia's managing director Andrew McEvoy has told AM the Indian image problem needed to be countered to achieve the aim of tripling the number of visitors by 2020.

Here's my interview with Andrew McEvoy broadcast on this morning's edition of AM.

"It's worth about $800-$820 million to the Australian economy now. There's probably around 145,000 Indians who are coming - that's including students and holidays, visiting friends and relatives, and business," Mr McEvoy said.

"We think by 2020 that could almost triple to about $2.4 billion at its best and that would mean there'd be 400,000 Indians coming to our country and high-yielding businesses and a mix again of education, holiday, business and visiting friends and relatives."

Mr McEvoy said he was working with Australia's High Commission in India to rebuild confidence and to attract "high yield" tourists.

"We took a view that we should look at India through the eyes of Indians whom we market over them. So we've used an MTV Bollywood couple who had their honeymoon in Australia as sort of the front people of our advertising. We've done a lot of work to rebuild the image and I think the High Commission has done a great job over there. So we're certainly back on track and there are big opportunities to come."

Mr McEvoy and Tourism Australia's chairman Geoff Dixon will use the Australian Tourism Directions conference in Canberra today to counter recent claims that Australia is viewed as the "world's dumb blonde" of tourism - attractive, but shallow and one dimensional.

" I think people like Geoff and I do take offence at that because Australia's reputation and image is outstanding and one thing that is not broken is probably the appeal of the destination.

The thing we've got to work harder on is, have we got to the right product mix in Australia, are we good enough in terms of quality of service and have we got the access to the products through aviation, cruise shipping and that sort of stuff," Mr McEvoy said.

Today's conference will also deal with criticisms that Tourism Australia's advertising and marketing message needs more clarity, given campaigns by state and territory bodies on top of the national agency.

Mr McEvoy concedes there is a communication problem.

"We are a bit inconsistent in the way we market our country offshore. We do often speak with too many voices and there are plenty of people representing our interests and we've just got to get that a bit more united, a bit more consistent."

Tourism Australia is also working to counter feedback about out-dated properties in Austraia, poor customer service and in some cases unexciting shopping.

Mr McEvoy refutes the criticisms but believes there is room for improvement.

"Look, I think as an industry we're pretty good at talking ourselves down. I would argue that products and experiences in Australia are massively appealing to a global consumer. Can we improve? Always. But I think that's happening and I think that the Australian industry is growing. Capital cities are going strong and I think our experience does stack up really, really well."
　
　
　
　
　

Insolvencies spike as companies feel pressure from debt defaulting clients

By Business editor Peter Ryan

The deepening global economic uncertainty and the potential fallout in Australia is pushing some businesses to the brink of financial ruin, according to research out today.

The credit reference agency Veda  has revealed a twenty percent spike in the number of companies going into administration since the global financial crisis hit three years ago.

However, the financial distress is not being caused by factors directly linked to Australia's two speed economy or instabliity fuelled by the sovereign debt crisis in Europe.

Instead, the Veda research shows more companies of becoming insolvent because their clients are defaulting on their bills as they struggle to preserve their own cash flows.

Veda's head of commercial risk Moses Samaha says the number of companies entering external administration has risen by 19.6 percent since the June quarter of 2008 when the global financial crisis took hold.

"Concern over a possible global credit crisis, reduced consumer sentiment and delays in customer payments are no doubt adding strain to business cash flow. Tighter financial and credit management practices will now prove vital for SMEs to avoid the risk of insolvency over the coming 12 months," Mr Samaha said.

Listen to my interview with Moses Samaha broadcast on "The World Today".

Mr Samaha said assessing the credit risk of customers and clients should now be a priority for any business given the current environment.

"This is necessary to help minimise business exposure to bad debtors and to help safeguard against risky business relationships. Organisations should also undertake a thorough background check on company owners and directors and not just the business entity itself."

The construction industry accounts for the largest proportion of external adminstration (18 percent), followed by manufacturing (13.9 pecent), retail (8.8 percent) and professional, scientific and tech services (8.3 percent).

Mining, information and media, and education and training accounted for the least amount of external administrations at 0.7 percent.

The Veda research also reveals that companies with 10 to 99 employees were over-represented in companies going into administration.

Mr Samaha said some customers were holding back on payments to companies in a bid to hold on to cash, as part of a vicious cycle of default.

"Cash flow is the "lifeblood" of any business. Poor credit control will greatly affect cash flow and the ability to pay debts on time, so it pays to develop an understanding of the financial situation of the business to which you are extending credit," he said

"This will give you an indication of how swiftly they may pay you for your products or services and the likely impact on your company finances."

Payday lenders fight "loan shark" image as government moves to cap excessive interest rates

The payday lending sector has stepped up it's campaign to thwart federal government plans to cap annual interest rates on loans which can sometimes exceed 500 percent.

While the government concedes payday loans are necessary for some people, it wants a cap of 48 percent on loans above $2,000 to protect consumers who are often on social security benefits.

But payday lenders warn that would limit credit for many and make some resort to loan sharks to make ends meet.

The National Financial Services Federation, which represents Australia's payday lender sector, is being advised by John Lamidey of the Consumer Finance Association in Britain.

In an interview with AM, he defended the payday lending business model and likened the applicable interest rate to a pint of beer on a 25 pound loan over a week.

Not surprisingly the "pint of beer" defence has been ridiculed by the Consumer Action Law Centre's media and communications officer Dan Simpson who writes:

"The reality is these loans are typically between $200 and $500 and the overall cost of the loan is particularly onerous for someone on a limited and fixed income (and research suggests most borrowers are).

"The reason lenders don’t have a problem with people paying back their loans isn’t because they only lend to those who can afford it -  it’s because repayments are secured through direct debits which take the repayments out of the borrows account on payday or pension day. Many borrowers can’t afford the loans but it isn’t the lender who goes without, it’s the borrowers who are often left without enough to live on after the repayments have been direct debited "

Former Treasury Secretary Ken Henry appointed to board of National Australia Bank

Apple co-founder Steve Jobs dead aged 56

Steve Jobs - often referred to as the Edison of his generation - has died aged 56 after a long battle with cancer.

The death of Apple's co-founder and former chief executive was announced in a statement by Apple.

The company's shares went into a trading halt on Wall Street in the leadup to the announcement.

Jobs leaves a legacy of technology that is now part of a global lifestyle, having developed the I-Mac, I-Pod, I-Phone and I-Pad.

Steve Jobs was a visionary who built the world's most successful technology company from a garage startup.

I looked at the Steve Jobs legacy on ABC News 24 with Joe O'Brien and ABC Science Online editor Darren Osborne.

To get a closer look at Steve Jobs' strategy on life and business, here's his 2005 commencement address at Stanford University:

Qantas dispute gets personal; Alan Joyce standing firm despite death threats

The industrial dispute at Qantas appears to be getting personal, as Australian Federal Police investigate threats made to the airline's chief executive Alan Joyce.

Here's my interview with Alan Joyce from this morning's edition of "AM".

The AFP is investigating specific threats made in letters sent to Mr Joyce and other senior executives.

Mr Joyce says bullying and intimidation of Qantas management is abhorrent and unacceptable and will not force a back-down or change of policy by the airline.

In a memo sent to staff yesterday, Mr Joyce labelled the letters to senior executives "cowardly" and "deplorable" and linked them to unions who are fighting the national carrier's restructuring plans.

Unions which are currently in dispute with Qantas have denied being involved.

ABC News 24: Reserve Bank holds rates steady at 4.75 percent.

Rates held steady at 4.75 percent. RBA says it will take more time to gauge effects of European/US turbulence.

The Reserve Bank today left interest rates on hold at 4.75 percent, saying it needs more time to gauge the impact of turbulence in Europe and the US on the Australian economy.

"It will take more time for evidence of any effects of the recent European and US financial turbulence on economic activity in other regions to emerge."

The decision marks the eleveth meeting that the cash rate has been kept steady.

Here's the RBA's statement released this afternoon.

Some other key quotes:

* The Board noted that financial conditions have been easing somewhat, with interest rates for some housing and business loans declining slightly due to increased competition and the fall in some funding costs in financial markets.

* The exchange rate has also declined from the very high levels of a few months ago. Credit growth remains low, however, and asset prices have declined.

* At today's meeting the Board judged the current cash rate remained appropriate. As always, the Board will continue to assess carefully the evolving outlook for growth and inflation.

Dollar falls below 95 US cents briefly; recovers after Australia's trade surplus doubles expectations

The Australian dollar took another hit in late morning trade as concerns remain that Greece will ultimately default on its debt obligations.

Here's my coverage broadcast on "The World Today".

The currency briefly slipped just below 95 US cents to a low of 94.77 US cents as investors continue to rush to the safety of the US dollar and US Treasury bonds.

The demise of the A$ has been rapid, having fallen through the 96 US cent barrier only yesterday.

However, unexpectedly strong economic data trimmed the dollar's demise, prompting a recovery to 95.38 US cents just after noon eastern daylight saving time.

According to the Australian Bureau of Statistics, building approvals for August rose by 11.4 percent when the market consensus had been for a one percent increase.

A trade surplus in August created a brief bout of optimism coming in at $3.1 billion - the widest gap since June 2010.

The gain has been driven by a surge in coal experts confirming that demand from China and India continues to underpin the performance of the Australian economy.

Computer says sell - fat fingered algorithm strikes again



From "The Telegraph" in London 4 October 2011.







Reserve Bank to leave rates steady at 4.75 percent - but for how long?

By Business editor Peter Ryan

Interest rates are almost certain to be left on hold when the board of the Reserve Bank meets this morning.

But given the growing fears of a global recession emanating from a Greek debt default and almost daily sharemarket plunges, the big question is "for how long?".

Some economists believe an interest rate cut is inevitable by the end of the year and money markets are factoring in a 25 percent chance of a 1.5 percentage point reduction in the cash rate over the next year.

However, in its September board minutes, the RBA said those forecasts might not be accurate for "technical reasons".

Here's my analysis from this morning's "AM", yesterday's edition of "The World Today" and ABC News Online.

German approval a victory for Angela Merkel but not a solution to Europe's debt crisis

Germany's approval of the enhanced bailout fund might be a political victory for Angela Merkel.

But analysts say much more is needed to end the crisis of confidence that is threatening not just Europe but the global economy.

The general view is that Germany and the EU are behind the curve in confronting the crisis given that the German Parliament's approval is only ratification of a deal proposed back in July.

Here's my analysis from this morning's edition of AM.

Credibility of trader who "dreams about a recession" under spotlight; admits he more of an "attention seeker" than a trader.

From The Telegraph in London:


http://www.telegraph.co.uk/finance/economics/8792829/BBC-financial-expert-Alessio-Rastani-Im-an-attention-seeker-not-a-trader.html

Trader Alessio Rastani tells the BBC he "dreams of a recession", says "the market is toast" and that Goldman Sachs controls the world.

Obama says Europe's debt crisis is "scaring the world".

By Business editor Peter Ryan

Barack Obama has urged European leaders to confront the deepening sovereign debt crisis, warning their inaction is "scaring the world".

Listen to my analysis of this latest development broadcast on the "The World Today".

The US president's blunt message follows an earlier warning from his treasury secretary Timothy Geithner that a fresh economic shock from Europe could cause cascading defaults and runs on banks.

"What's happening in Europe, they have not fully healed from the crisis back in 2007 and never fully dealt with all the challenges that their banking system faced," he said.

"It's now being compounded by what's happening in Greece.

"So they're going through a financial crisis that is scaring the world, and they're trying to take responsible actions, but those actions haven't been quite as quick as they need to be."

The pressure on the EU is immense - the World Bank and the International Monetary Fund have already urged EU leaders to get their act together and agree on a plan.

EU leaders appear to be listening and say they are inching towards a multi-trillion-dollar bailout mechanism to firewall Italy and Spain from the debt contagion.

Mr Obama's re-election is dependent on turning around the economy, getting unemployment below 9 per cent, and avoiding another recession.

Retail super funds a poor investment compared to money in the bank over 14 years - with the benefit of hindsight.

By Business editor Peter Ryan

Anyone close to retirement or already retired will be closely watching the performance of their superannuation fund given the current market volatility.

Even though superannuation needs to be viewed over the long term, the returns also depend on the type of fund managing retirement nest eggs.

Research out today from the Industry Super Network shows that when it comes to retail super funds, some investors would have been better off putting their super contributions in the bank.

Listen to my interview with David Whiteley from the Industry Super Network from this morning's edition of AM.

"Many of those people would be deeply alarmed to find that if they've invested in a retail fund, if that is the default fund at their workplace, over 14 years the performance of that is likely to be inferior to cash. That means many of these people would have been better just putting their money in the bank," according to the Mr Whiteley.

G20 leaders try to calm financial markets; Europe signals is will bring forward US$700 rescue fund to stablise Italy and Spain

By Business editor Peter Ryan

It's been another volatile night on financial markets despite assurances from policy makers that plans are afoot to avert a new economic shock.

Stocks in Europe and the US rebounded after wild swings, but only after the European Union said it was fast tracking the setup of a permanent rescue fund.

But global investors remained unconvinced and the selloff in risk exposed commodites continues as money pours in to the perceived safe havens of the US dollar and US treasury bonds.

G20 leaders meeting in Washington said they would take "all steps necessary" to calm financial markets pledging "collective and bold action".


Here's my analysis broadcast on the ABC's "AM" program.

Reserve Bank points to uncertain future; unsure if current crisis will spark "serious market dislocation"

By Business editor Peter Ryan

The Reserve Bank has forecast an increasingly uncertain outlook for the global financial system while noting Australia is in a “relatively strong condition”.

In its latest Financial Stability Review, the RBA pointed to an escalation in sovereign debt sustainability in Europe and “severe market reactions” over the past six months.

The Review says Europe’s sovereign debt crisis, and a reassessment of growth prospects in the US and Europe have “helped trigger a period of heightened turbulence” which has raised risk aversion in funding markets.


Listen to my analysis broadcast on "The World Today".

Global markets plunge; investors fly from risk to greenback and US treasuries

RBA's Battelino kills rate cut hopes; says Australia no longer catches cold when US sneezes

By Business editor Peter Ryan  - analysis

The deputy governor of the Reserve Bank has painted an upbeat picture of the Australian economy, signalling that interest rates are unlikely to be cut.

Speaking in New York overnight, Ric Battelino says Australia's fortunes are now largely tied to China and that any downturn in the US won't necessarily resound here.

Mr Battelino also cast doubt over the recent increase in Australia's jobless rate warning there was no firm evidence that labour market is weakening.

Here's my story on ABC News Online, and you can listen to the item broadcast on The World Today.

News Flash from IMF - global economy is in deep trouble; urges EU to "get its act together".

By Business editor Peter Ryan

The International Monetary Fund has urged Europe to "get its act together" and deal with the deepening sovereign debt crisis.

The IMF warned the US and Europe could slide back into recession and said the global economy has entered a "dangerous new phase".

Here's my analysis broadcast on "The World Today".

The Fund's chief economist Olivier Blanchard said European leaders had been one step behind panicked financial markets, adding to criticisms that EU leaders have been divided in the face of a ticking debt bomb.

"We are very explicit in our messages, both in the EU and elsewhere, in saying that Europe must get its act together and it is absolutely essential that they do what's needed. It is indeed a major source of worry. So you can see us as indeed issuing a call to arms," Mr Blanchard told reporters in Washington.

Mr Blanchard singled out Europe as "a major source of worry"  as he released the IMF's latest World Economic Outlook report.

 

RBA "well positioned" to cut rates but rate cut seen unlikely

The Reserve Bank has signalled it is well-placed to cut interest rates if global economic conditions continue to deteriorate.

But in the minutes from its September meeting a fortnight ago, the central bank board says it is still determining how those pressures might help contain inflation.

Here's my take on the RBA minutes broadcast on The World Today.

The RBA is also concerned about the soft Australian economy and the continuing impact of the high Australian dollar on manufacturing and tourism.

However the minutes show the board is sceptical about market predictions for an interest rates cut, warning that a range of technical factors mean market pricing might not be accurate given the current circumstances.

The weakening chance of a rate cut by the end of the year pushed the Australian dollar as high as 102.58 US cent after the minutes were released.

Greek tragedy fast running out of chapters

It's been another shaky session on global financial markets, with time running out for Greece to avoid defaulting on its debt.


Stocks across Europe plunged around three percent on concerns the Greek government will fail to meet requirements for a fresh bailout.


As talks between EU leaders and the IMF lurch into farce, Greece is set to run out of money within weeks, which means public servants won't be paid and pensions will go on hold


Now the Greek government has promised as much austerity as possible to win the next installment of financial aid - but lenders are demanding great cuts to public spending and greater tax collection.


This is going to be a hard sell to Greek taxpayers who are already hurting, and there's a view that Greece is being made a scapegoat for bad EU policy decisions and the lack of decisive action on the sovereign debt crisis.


But despite this glimmer of hope, the stress getting worse and yields for Italian and Spanish bonds have risen above five percent on fears that those two powerhouse economies are at risk of contagian.


With the financial aid for Greece showing few signs of working, perhaps it's time for Greece to leave to EU to sort out its own problems.


The economist who predicted the GFC in the first place, Nouriel Roubini of Harvard University, says Greece should begin an orderly default without delay.


Professor Roubini says this will help Greence avoid a vicious cycle of insolvency, low competitiveness and the possibility of a depression.
 And he says a return to the Dracma currency will allow Greece to depreciate and restore growth, which helped Argentina after it defaulted a decade ago.　

IMF chief slams "feeble" European leaders; says debt crisis moving into dangerous new phase for world.

The head of the International Monetary Fund has warned the economic crisis gripping Europe is entering a dangerous new phase.

Christine Legarde says Europe's sovereign debt woes have been made worse by what she's described as "feeble political leadership".

Her calls for bold action to ease the crisis came as major central banks agreed to provide a financial lifeline to European banks for the rest of the year.

Here's my analysis from The World Today.

Former RBA boss backs Glenn Stevens' million dollar pay deal; says excessive private sector salaries should be scrutinised

Former Reserve Bank governor Bernie Fraser says the Federal Treasurer should be examining excessive private sector salaries when considering the remuneration package for the head of the Reserve Bank.

Mr Fraser made the comments when I spoke with him in this story aired on The World Today.

The Treasurer Wayne Swan has moved to strip the RBA of its ability to set its own pay rates for board members and executives.

It comes in the wake of the RBA remuneration committee's decision to approve a $234,000 pay increase for governor Glenn Stevens, taking his total pay package to $1.05 million - almost triple what Prime Minister Julia Gillard earns.

The RBA will now come under the Remuneration Tribunal, which also determines politicians' pay.

Reserve Bank stripped of powers to strike independent pay deals with top executives

The Reserve Bank has been stripped of its power to independently set the salary deals of its governor, board and top executives.

The decision follows a decision by the central bank's remumeration committee to approve a $234,000 paying increase for RBA governor Glenn Stevens, taking his total package $1.05 million.

The increase angered the Treasurer Wayne Swan earlier this year after revelations that Mr Stevens would be paid significantly more than the chairman of the US Federal Reserve Ben Bernanke ($199,700) and the president of the European Central Bank Jean-Claude Trichet ($504,900).

However, Mr Swan handed the RBA's salary setting powers to the Reumuneration Tribunal which sets pay, entitlement and allowance for other top public servants such department heads, judges and the chairmen of the Australian Competition & Consumer Commission (ACCC) and the Australian Securities & Investments Commission (ASIC).

In an interview with the Bloomberg wire service, Mr Swan said: "I've put in place a set of arrangements that mean that future decisions taken about those salaries will be in the context of other salaries paid to comparable people in the public sector.

"I have taken that action so that when the board takes its decision, it takes its decision within a framework set by government."

Mr Swan was unavailable for an interview with the ABC, but his office said the changes had been gazetted a month ago.

A spokeswoman for the Reserve Bank confirmed the gazetted change, and referred the ABC to the Remuneration Tribunal website.

The move culminates debate about the RBA governor's remuneration, amid criticism that the increase was out of line with community expectations in light of the global financial crisis.

However, some economists argue that Mr Stevens' salary is appropriate given the smooth operation of Australia's central bank and how it steered the economy clear of falling into a recession that engulfed much of the developed world.