Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts

Australian Wine Society Million of Dollars in Debt

HEALTH
It seems just about everybody is investing in vineyards. The wine industry has drawn in big investors and hobbyists. Unfortunately, people do not think before they jump in. They are seeking to fulfill a dream: there is a certain amount of glamour involved in saying I am a wine maker, a vintner.
Wine society drinking
Too much drinking not enough thinking
There is a world glut of wine, particularly the cheap ones. Nations have pushed to establish new vineyards. It has the aura of a local car industry or airline. Newcomers enter the industry all the time without doing any research and little training.

It is no surprise to hear that the oldest wine club in Australia founded in 1946 is in the red, by a shocking amount. It owes a staggering $4.2 million to its wine producers. It operates as a distributor, buy and selling, though ostensibly not-for-profit. Supermarket chains sell nearly all wine in Australia and in a situation of oversupply they don't pay much for it. These major players "do" their homework, unlike the suppliers.

The Wine Society is in deep trouble. Things are so bad that membership of the prestigious club has fallen by a quarter over the last three years. Demand for premium wines which used to have a high, profitable markeup has dramatically decline. Consumers buy more of the cheap stuff.

To clear the debt a complicated "splitting" of the business is taking place. However, selling the wholesale section to the Fogarty Wine Group for a measly $75,000 will not help its finances are all. This will allow the society to borrow $3 million. Taking on more debt is folly.
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Government Beliefs Have No Foundation

The present federal government has a policy of the market will solve all problems: we will get rid of regulatory bodies and legislation. This would be good if it was right but it isn't. Private industry will not build roads, for example.

Getting rid of regulation on investment advisers was a mistake. Thankfully it was resurrected and defeated in the Senate. If it had stayed, advisers would have pulled the wool over the eyes of the poor in society - those who do not know how the system operates.

The government is trying to abolish the body that reviews charity organizations. Senate opposition will put an end to this. Why is the government wasting its time and taxpayers money throwing legislation at the Senate that clearly will not get through?

There is no debt problem in Australia contrary to the wild obsession put forward by the Coalition. Australia has only 17 per cent debt. This compares to over 90 per cent for most other Western countries.

The economy has had a dramatic fall in growth. This could be seen as due to spending cuts. However, there have been only small spending cuts. The national debt is higher now than it was under Labor.  Blaming Labor would seem to be right, but Independents, Greens and the Palmer United Party are blocking radical changes.

Abolishing the carbon tax is seem as a win for the Coalition. This is only for the short term. There is no doubt it will be back when we have a labor government after the next election. Just the threat of cuts is offending voters right across the board. Putting it bluntly, Tony Abbott looks like a fool stumbling in the dark. Reason and common sense are not part of his arsenal. National debt is a furphy: people don't care about debt as long as they can earn an income.
Politics by Ty Buchanan
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Who Do We Owe Money To? It isn't Real!

Everyone is in debt. That seems to be the case. But if we all owe money to whom are we indebted? Who are these fat cats who spend their days on the beach having cool drinks brought to them while they while away the time sunbathing?

If truth be known the money does not actually exist. It has been created in the books of independent and national banks. In centuries passed the local blacksmith acted as the bank. Gold, silver and promissory notes were left in his safe. He soon became aware that the "goods" left for safe keeping would not be taken out by the owner for a very long time, if ever. For storing the valuable minerals and promissory notes he gave promissory notes in return. This meant that he could create money. He could also give loans, a large part of which would return directly back because the debtor opened a new account.

When large private banks started, governments gave an assurance that a run on an institution would be protected by public money. We have seen how silly this concept has proved to be by the US and European governments bailing out private banks. Private debt has become public debt. This on top of the mushrooming private debt worldwide.

Much of Western debt is owed to China which buys US bonds. It is a mistake to believe that it wants the money back any time soon. If it did the world economy would grind to a halt. Then, who would buy its exports?

The real problem is economics. This social science is just theory. There are complicated models that do not apply to the real world, with demand and supply curves, meeting long term average costs and so on. Real business doesn't operate that way. There is not one model for cost plus 10 or 20 percent, or get it cheap and sell high until demand stops then throw the stuff out. That is how business really runs.

Note the supermarkets, they don't cut the price of everything that doesn't sell. They would rather throw it away than sell it. After all, they make the supplier take the loss. Economic advisers have not helped one government to balance the books. And the advice they are giving now to raise taxes and cut spending will surely prolong the recession. Cutting debt is like turning the water tap down - someone has to go without! Let's be honest much of this debt will never be paid. It doesn't really exist.
Economics by Ty Buchanan
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Society by Ty Buchanan
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Privatization Is Not the Answer for Government

Australia is going down the same road as the British by privatizing public resources. There is a major problem with this economic theory. That is, that once resource are sold and the money is used to pay off debt it cannot be sold again. When railways, electricity and water are privatized they are no longer under public control. Ordinary people are at the mercy of private enterprise who have been shown to continually increase charges beyond what citizens can bear.

This is the cold reality of what the future will be like. Politicians of the right have put faith in private enterprise for a century or more. The trickle down benefits of wealth are shown to be completely wrong. The riches of nations is still being consolidated into fewer hands. The poorer are poorer still. Despite consumer goods being widespread, very few can afford a Ferrari. Millionaires have been superseded by billionaires. And the these consumers of all things monetary still want more.

When services are outsourced to the private sector there is one significant effect - wages and conditions get worse for lower-paid workers. Casual and part-time employment becomes the norm. The Premier of Queensland is stripping the public sector of "unneeded" departments. This has personally affected me. My son was dismissed after more than ten years of loyal service when his department was closed. Now the state government has to pay enormous costs to private industry to obtain these necessary service and the debt has not been reduced.

Like the nonexistent trickle down effect it is faith not economics. Some things still need to be kept in public hands. Are we going to have toll roads everywhere with road taxes payable to private companies? This will definitely not happen. Water supply is too important to be privatised. It is best handled by councils as local monopolies. The present experiment of having separate bodies manage water will fail in the end. It will go back to councils.
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Politics by Ty Buchanan
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Who Do We Owe Money To?

Everyone is in debt. That seems to be the case. But if we all owe money to whom are we indebted? Who are these fat cats who spend their days on the beach having cool drinks brought to them while they while away the time sunbathing?

If truth be known the money does not actually exist. It has been created in the books of independent and national banks. In centuries passed the local blacksmith acted as the bank. Gold, silver and promissory notes were left in his safe. He soon became aware that the "goods" left for safe keeping would not be taken out by the owner for a very long time, if ever. For storing the valuable minerals and promissory notes he gave promissory notes in return. This meant that he could create money. He could also give loans, a large part of which would return directly back because the debtor opened a new account.

When large private banks started, governments gave an assurance that a run on an institution would be protected by public money. We have seen how silly this concept has proved to be by the US and European governments bailing out private banks. Private debt has become public debt. This on top of the mushrooming private debt worldwide.

Much of Western debt is owed to China which buys US bonds. It is a mistake to believe that it wants the money back any time soon. If it did the world economy would grind to a halt. Then, who would buy its exports?

The real problem is economics. This social science is just theory. There are complicated models that do not apply to the real world, with demand and supply curves, meeting long term average costs and so on. Real business doesn't operate that way. There is not one model for cost plus 10 or 20 percent, or get it cheap and sell high until demand stops then throw the stuff out. That is how business really runs. Note the supermarkets, they don't cut the price of everything that doesn't sell. They would rather throw it away than sell it. After all, they make the supplier take the loss. Economic advisers have not helped one government to balance the books. And the advice they are giving now to raise taxes and cut spending will surely prolong the recession. Cutting debt is like turning the water tap down - someone has to go without! Let's be honest much of this debt will never be paid. It doesn't really exist.
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