Clear evidence of the end of the USD$ as dominant International Trading currency

This caught my attention recently …. an interesting read

After the UK announced that it will join the new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member late last week, Germany, France and Italy decided yesterday to follow Britain’s lead and join as well….

This is part of an important transition from the old domination of the USD$ in Internal Trade, particularly in commodities, where up to now, the USD$ has been dominant. Recently there has been an increasing trend to trade commodities in the buyers or sellers currency – for instance in the case of transactions in the Chinese Yuan and the Russian Ruble.

These changes may well be detrimental to the United States in how it pays for overseas debt, that isn’t held in US Dollars. In that case it can no longer just print the necessary currency, it would have to buy the overseas currency at the prevailing exchange rate …. and with the liquidity of the United States already in question, with a estimated net solvency of approximately minus USD$60 trillion – the long term view is not positive, especially when the financial speculators start selling the USD aggressively.

The USA has no way of paying out its current deficit of in excess of USD$18 trillion dollars, accumulated by putting wars on credit card so to speak.  The United States, financially speaking is like a dead man walking …. I am not a financial specialist, but I cannot see a way out for them, unless they seriously cut their spending and increase income currently avoided through taxation loopholes. Surely if corporations are people then like the normal citizens of the USA, they should be taxed on the world wide income, regardless of the tax evasion strategies which they have in place.

A personal strategy would be not to leave funds in USD$ … to ruthlessly minimize your debt, and to put what funds you do have into “safe” (if there is such a thing) currencies, but preferably into hard assets like real estate or gold / silver, the actual metal not the paper equivalent. My personal strategy will be primarily real estate and keeping a minimum amount in liquid assets – and in setting up a simpler life style, whatever that means for you.

One thing that has had a marked effect on the value of the USD$ has been the confidence, Yes confidence that the world has in the currency, everything changes, that perception has changed in no small way due to the war that the American Republican party has been waging against President Obama, holding the USD economy as hostage … this in my view has been a major reason for the loss of face which has led to the loss of faith in this currency.

Good Luck .. just know everything changes and we are always in transition from what was, to what will be.

Telstra and the NBN

Research , tells us that the sale of Telecom Australia which was established in 1975 (to eventually become Telstra) had been an issue of public policy debate for well over a decade. It was talked about in the late 1980s and early 1990s as the Hawke Labor Government implemented a micro-economic reform agenda that included the privatisation of a number of Commonwealth assets including AUSSAT, the Commonwealth Bank, Australian Airlines, the Commonwealth airports, the Commonwealth Serum Laboratories (CSL) and Qantas. Labor generally opposed any sell-off of Telstra, but did consider the splitting of Telstra on a number of occasions

From the attached link here we can see that the Australian Senate has passed the legislation to split Telstra into a retail and wholesale (network assets) parts, Telstra, the monopolistic legacy provider of all Telecommunications infrastructure in Australia.

To me this whole situation is moot.

The Australian Government sold Telstra when it went private under a former Australian Government, and the government was paid for this assets and the remainder of this , though there is not that is left (approx 10%) is owned by the  Future Fund a government entity which was established in 2006, basically to meet the long term commitments of Public sector Superannuation payments…. see here.

My point is that we are using some of the same money that went into the coffers which we ere paid when Telstra went Private to exchange the Privately owned monopoly that was Telstra for another monopoly which is the National Broadband Network … the only difference being that this one is a government monopoly.

In a few years when the Government has spent tens of billions of our dollars on the NBN and its implementation, they will probably privatise it. Then essentially we will be back where we are now, with a Private enterprise monopoly –  funny does anyone else see something here that looks like Telstra, feels like Telstra and smells like Telstra  –  ah… then its Telstra by another name.

Surely it would have been cheaper just to buy back Telstra, just wait a while, until its shares lose more value they will be giving them away with your breakfast cereal.

Or perhaps they didn’t want the aggravation of trying to institute the massive structural and cultural changes that would be necessary for Telstra to change from the former monopolistic anachronism into a relevant, sustainable, transparent, accountable customer focused organisation, in short into a viable business model … Wow !! No wonder they are going for an alternative, actually I agree, it seems to be an almost impossible task.

For this to actually happen would perhaps require the board of Telstra instituting (and paying for) the changes, they would have to care and give a dam, a necessarily focused team would have to be imposed on Telstra –  independent of the operational structure, and finally the will and commitment to spend many billions of dollars over perhaps 7– 10+ years.  Then if successful, Telstra might have a possibility of resurrecting a worthwhile business model … this is part of what I do …. I am so aware of the enormity of the task. However there is no choice, Telstra has to be rebuilt from a organisational, structural and most important a cultural point of view, otherwise it will be as relevant to the future of communications technology as is the current manufacturer of buggy whips. Personally I see much of Telstra’s problem is a lack of a coherent vision, including the active involvement of all stakeholders, until this happens Telstra will not be relevant and competitive – long term.

Such transformations are possible, I once had hopes that the culture of the ANZ Bank which I considered such a success story, however my previous article about Green-washing here – has shown me, that the changes appear to be only skin deep, the culture has not appeared to change as I had hoped… greed is still greed – a sustainable accountable culture does not seem to have taken … very sad.

Well back to the article, I foresee a long term career here, as after working on Telstra for about 10 years a few short years later (or even sooner) we would have to do it all over again, to refocus and change the culture of the NBN after it goes back to private ownership …. so I could move from Telstra to the NBN … to institute similar organisational and culture changes …. then I could retire and write about the experience … but what an experience it would be.

Does anyone else see a cycle here…. ?  The real problem is that these decisions are not driven by anything other than incompetence, short term strategy, expedience, and ego –  after all,  they are politicians.  Could it be that the Labor Party is trying to correct the fact that Telstra was privatised in the first place ?

Essentially the problem is that nobody learns from the past, they always think this time it will be different …. without a underlying commitment to an ethical and sustainable culture as the basis for the paradigm, our egos, will screw it up … do you think it is possible for us to put aside our egos and actually work together  … pretty please ?

How not to do a Oil deal ..

This is an interesting breakdown of how not to do an oil deal, ladies and gentlemen, if you are more than two away from a buyer or a seller mandate the likely hood of a close is very, very low.

A couple of other points to remember (1) Verify everything you are told, because even ethical operators are told lies – I say this because if you take someone to a buyer or a seller and they are not real, you will only hurt your credibility and your future – this is a serious business and brokers who do not invest in verifying their leads are bad for the business (2) once you have been in the game a while you will know who is real and who isn’t .. if someone is open, transparent, ethical and honest stick with them even if they currently are not direct, they will be, if your contact, no matter who he or she is lies to you …. then save yourself a lot of grief and walk away.

Please see the Video as attached from a good friend of mine

Mate, thanks very much for the time you put into this.

Commodities – 102

What is POP – nominally defined as Proof of Product… in the commodities industry it is the actual legal proof that the product exists, therefore as it is in effect the title documents for the product, it is very carefully guarded and will only be released (normally) after the buyer has provided the POF, which proves the ability of the buyer to provide the funds.

Think of it this way, you walk into a store to buy a ice cream, asking for POP without showing POF is like being given the item before the shop keeper is able to know if you have the money to actually buy the product. Normally unless the buyer is a major (Exxon, Chevron, Airlines and the suchlike)  a seller will never give POP before the buyer proves he has the capacity to buy the product.

Partial POP is usually some of the information from the seller concerning refinery commitment letters to produce, export approvals and such like, along with SGS and Tank receipts for the product, Dip test is almost never part of Partial POP.

We mention full POP upon receipt of POF, instead of partial POP what does it mean? : It means that the product is already produced (at least the first monthly delivery is available in pipeline / refinery’s tanks and can be delivered immediately). That is what many companies incorrectly offer as “SPOT” – it is not same – “SPOT” really means that product is in tank and to be delivered within maximum 48 hours in tank. Immediate Delivery means the product is in pipeline (ex-tank) with possible a small quantity in tank at terminal of loading port.

That is reason that some sellers provide full POP including SGS documents. For the “comfort” of the Buyer he has the necessary permission to make extra dip test (physically test the amount of product in the tank) for the part of available product in tank. So, immediate delivery means that product is available to be loaded upon receipt of bank instrument.

Estimating 10 days as Charter Party Agreement / Storage Facility will be required in the name of end Buyer.

Bonuses – This looks like a good idea

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Now with the European Union likely to legislate to specify how bonuses will be paid, for instance a large benefit is only able to have a 20% cash bonus… I am sure the affected people are even now re-structuring their pay to counteract this… perhaps by increasing the fixed component of the pay package…

In the United States it seems is not going to legislate, but issue guidelines… which I am sure that they will be bent, sidestepped and outright broken as a result.
However staying in the USA for a moment, something new has come to my attention…. a new basis for paying bonuses… as we know once of the companies, formerly a major casualty of the sub-prime fiasco and their own corporate greed at that time, has come up with what I believe is a solution… that Compensation for those who receive bonuses should be tied more closely to corporate debt rather than equity… what a resounding good idea, as well as responsible one… how unlike a Corporation.!

I am speaking here of AIG (American International Group) who announced that it will link incentive pay to the value of their insurer’s bonds.

This makes cowboy activities less likely, especially as a short term tactical strategy, and I hope this will turn the train around and move it back to responsibility not only to the company, the industry but also the shareholders – but also to the Corporate world in general.  I believe that these types of incentives protect the interest of bondholders and the ultimate value of the company… this will come to be a good strategy especially in uncertain times, and more particularly when a company’s solvency is in question.

Perhaps the rest of the world, particularly The European Union as well as all markets affected by this disease should take notice

Commodities & Ethics

Commodities is a fascinating sector to work in; the trading on everything from Oil, Gas, mineral and food commodities is essential for the worlds economies. Generally it is however the most difficult place to actually do a deal, because of the lack of any effective control, regulations or transparency in its dealing with the other companies in the sector.

My company is acting primarily at the point as a seller mandate for those sellers who have products to sell; well you may think that is wonderful, because no matter who actually buys the product you are selling we get paid, this is right, however there are a few assumptions with that line of reasoning; as with every human endeavour the single most important part of dealing in this sector is due diligence on the supplier, the product, the seller and buyer chains including the mandates and of course the actual buyers.

Now currently I have a deal for 30 million barrels of JP54 (jet fuel) do u think I can find a real buyer who can follow the procedures on this deal ?  Lots of talk, lots of rhetoric, lots of promises, but no actual real buyer… the majority of buyers want POP (Proof of Product) before they will show any POF (Proof of their funds) – unfortunately sellers will not provide anything to a buyer ( unless a major or mid-major) until they have shown Proof of Funds… so we are in this difficult place.. which always comes down to who will blink first…

Sellers have to follow specified procedures, because normally these procedures are forced on them in a direct response to their suppliers, who are generally refineries. 

Quite frankly if I hear one more buyer tell me he wants POP, proof of product,,, before providing anything I think I will scream… POP is like the title document to you house, it is the legal proof that the product exists, and can be lifted.  Too many buyers want Proof of Product, when they have no money of their own, because they need the POP to show their bank or backers to release the fund to buy the product so they can on-sell the product usually without owning the product outright for less than a few moments… this is called flipping….

Essentially if I had a understanding bank manager, and a POP document, I could also trade in Oil… using the POP to take to a major buyer… like I say to these continual requests for POP… if I had POP what would I need you for… you are the Oil trader, you are supposed to actually have the capacity to buy the oil to resell at a higher price.

In the last week I have dealt with five so called buyers, not one of them would stick to the sellers procedures, not one of them was capable of buying the product we have for sale…

Unfortunately ethics, honour, transparency and integrity are very rare beasts to find in the commodities game… sadly.  When you find someone who exhibits these attributes hang on to them, because they are definitely the exception not the rule.

More on this soon..

Telstra the Australian Communications , what I wonder?

This is a bitch session… in that regard you may want to move on… however lets start.

Most of my business life I have felt inclined to support Telstra… support Australian and all that – now I wonder why..

Aside from being about twice the cost of everyone in the marketplace, which the spin has always been then give superior facilities, features, reach and service – this is proving to be very old… and frankly untrue, as when it comes to the main markets their service, features and support is no better than their competition, however one aspect of their operation (I am sure there is more) is just plain pathetic.

For the real issue is the billing and payments side of their operation, where they interface with the public, in this case with me…. they make commitments when you are signing up for a service then break them,, they agree to charge $x then make up the charges as they go along, and whilst I find the operatives at the telstra subsiduary at Bigpond, generally refreshing and worth talking to… Telstra itself, is a disaster… now I am not blaming the people within Telstra… they work within a shell, a system, but some thinking must be really askew here, someone or some oversight committee has to be a fault for such a systemic failure of this part of their operation.

They promised me a refund for some equipment we purchased, then 4 months later when I queried it, they said they had a problem with one of the codes… after all they cannot say they couldn’t contact me to correct the issue….as the whole refund was based around my email account… really!!!! Then they said it would another 3 months… do you think Telstra has some cash flow issues….??? If not what could possibly be the reason for their pathetic customer service.

Every month I dread the arrival of the bill, they always.. ALWAYS screw it up… I have just been able after 6 months to make them understand I cancelled a service and have not used it since May… A month ago Bigpond agreed I have been over charged and gave me a credit of just under $200, but it has not filtered down to Telstra billings… they are still demanding payment for services I cancelled 6 almost 7 months ago….and the other side of the coin.. having new services connected.. well I moved to new offices in May… and they have still not connected extra landlines I need.. which we ordered before I arrived. I wonder if anyone else can do that for me ???

Think I will go looking for an all around provider… someone who actually listens to me… whatever happened to the old idiom, the customer is always right… they seem to function on the premise that the customer is always wrong… they do not listen to their customer base… this will cost them dearly in the long term… people will walk… very shortly me for one… if they DO NOT LISTEN.