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Are we heading for rising unemployment?

It's only anecdotal but this morning on talkback radio there was one of those "Joe* needs a job, does anyone have a job for Joe, will do anything and wants to work" etc calls. Haven't heard radio stations trying to match people with jobs for years and it immediately remineded me of the early 1990's. The person who called was based somewhere in regional NSW.

Is this just a one off or the sign of things to come? I noticed that the government has been arguing that unemployment is already rising in relation to the low paid workers pay claim.

*Not the caller's real name. Can't remember what their name was. :2twocents
 
Smurf1976 said:
Are we heading for rising unemployment?

It's only anecdotal but this morning on talkback radio there was one of those "Joe* needs a job, does anyone have a job for Joe, will do anything and wants to work" etc calls. Haven't heard radio stations trying to match people with jobs for years and it immediately remineded me of the early 1990's. The person who called was based somewhere in regional NSW.

Is this just a one off or the sign of things to come? I noticed that the government has been arguing that unemployment is already rising in relation to the low paid workers pay claim.

*Not the caller's real name. Can't remember what their name was. :2twocents
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This might help solve the oil crises?

Coal-To-Oil: Linc Energy Aspires To World Leadership
FN Arena News - August 05 2006

By Greg Peel

FN Arena's feature story of 13 July, "Will Coal Replace Oil?", has sparked significant reader interest. Having been developed early in the twentieth century, coal-to-oil conversion is only now being given close attention by a world reeling from high oil prices and talk of dwindling reserves of crude.

Using technology originally utilised by Hitler in World War II, even "waste" coal can be converted first into gas and then into liquid fuels, particularly diesel and jet fuel. South Africa's Sasol has led the world in recent technological development, and US companies have thrown their money behind projects as well. One small Australian company, Linc Energy (LNC), is also at the forefront.

Linc has been tinkering with coal conversion at its site in Chinchilla in Queensland for the past six years. In May, the company made a small initial public offering, raising $22m to take the company into Stage One of its production plans. At an issue price of $0.25, the shares have not yet attracted particular secondary interest, trading at around $0.19 at present.

Stage One is only a small precursor to Stage Two, for which the company plans to raise a further $650m, mainly through debt.

Linc's plan is to commercially produce "ultra clean" diesel and jet fuels through a two-step process. First the coal is converted to gas while still underground, known as underground coal gasification (UCG), and then processed in a gas-to-liquids (GTL) facility above ground.

The Stage One precursor involves the development of a 5 barrel per day (bpd) "demonstration" plant. In Stage Two, a commercial level plant will be constructed with a target of 20,000bpd. By first building a demonstration plant Linc hopes to satisfy potential investors that the technology is all it's cracked up to be (pardon the pun). In the past six years Linc has demonstrated cost effective and efficient production of gas through UCG.

The next step of GTL will be developed with the co-operation of US-based Syntroleum Corp, with whom Linc has signed a memorandum of agreement. Linc will adopt Syntroleum's own twenty-first century improvements on the Fischer-Tropsch technology for GTL, first used by Hitler. Syntroleum has an option for equity participation in Linc's projects.

As well as a memorandum of agreement, Linc also has forward licensing and offtake arrangements in place with Syntroleum, as well as with BP Australia and Ergo Exergy Inc (Canada). Stage Three of Linc's business model is the expansion of the UCG and GTL production process into global markets.

The GTL part of the process involves technology that is currently being implemented in various projects around the world, and its integrity has now long been established. Royal Dutch Shell, Exxon Mobil, Chevron, Conoco Phillips and Syntroleum are all in the process of building pilot projects. Sasol is currently providing around 25% of South Africa's fuel needs.

The UCG part of the process is a different case in point. Linc's project has been under development since 1999 and is the first project in the Western world to implement it. Ergo Exergy is a leader in the technology and is partnering in the development. The technical director is a Russian scientist who had been instrumental in the Soviet UCG program for 25 years. Sort of adds a whole James Bond feel to it I think.

The biggest advantage of UCG over other coal-to-gas conversion methods is that it happens right in the virgin coal seam. There is no need to actually get the coal out of the ground first. What's more, the Chinchilla project is exploiting a coal source previously considered "stranded". In other words, the coal is there, but it is not commercially exploitable using traditional methods.

The fact that the GTL plant will be located right on top of the coal source also provides Linc with a unique set-up. In most cases the coal is transported in. Having the gasification process occurring underground also provides significant environmental benefits.

One of the drawbacks of coal-to-oil conversion is the production of large amounts of carbon dioxide as a by-product. While the resultant oil products are much cleaner than their traditionally-cracked counterparts, the production process is not in itself providing much in the way of a carbon credit. Moreover, the resultant units of energy output are only marginally greater than the units of energy input required.

According to Keith Allaun, General Manager (Human Resources) at Linc, the company's liquid fuel production process will be five times more energy efficient than a standard coal-burning power station. The process also allows for the carbon dioxide by-product to easily be captured in the UCG stage of production, and then be reformed into carbon monoxide and ultimately diesel. This technology is already commercially available and Linc has "the world's best process engineers" consulting on the project.

Linc has a soundly established environmental impact agenda. Were carbon credits to be ultimately securitised in Australia, Linc would be "a big winner".

Stage One – the demonstration stage – is planned to be running for another fifteen months before the financing required for Stage Two is sought ($650 million). Presently Linc is anticipating an 80/20 mix of debt and equity. It is expected the first commercial production will commence three years from now.

Chinchilla has an estimated coal deposit of 300Mt, although proving has only been completed to date for 16Mt. That proving process is currently ongoing. Linc lays claim to another 12-16 potentially viable sources in Australia and exploration is continuing. Some of these are suitable for UCG, but some are not.

Linc plans to become a world leader in coal-to-oil conversion using UCG/GTL. One company which is very interested in Linc at the moment is Sasol. Keith Allaun notes that current estimates suggest (at current rates of usage) there are 1000 years worth of "stranded" coal reserves in the world.

The only stock broker to provide a research report and recommendation to date on Linc Energy is BBY. The analysts have valued both stages of Linc's project development using a discounted cash flow (DCF) valuation. They have also made more conservative assumptions than those provided by Linc.

Linc assumes a weighted average cost of capital (WACC) of 13.1%, BBY has assumed 15%. Linc assumes a long term oil price of WTI US$45/bbl, BBY is assuming US$42/bbl.Linc assumes a long term exchange rate of US$0.75, BBY is assuming US$0.70. Linc has now assumed a debt/equity ratio for the second raising of 80/20, BBY is assuming 60/40.

BBY also assumes that if the Stage One demonstration plant progresses successfully and according to plan, the market will continue to "de-risk" Linc Energy. Hence the analysts assume the stage two equity raising will be conducted at $1.00ps. (First raising was at $0.25ps). On this calculation there will be around 580 million Linc Energy shares on issue after placement.

BBY has arrived at a fully diluted DCF valuation of $1.52ps. The analysts recommend Buy.

BBY has set a 12-month price target of $0.71. The shares are currently trading around $0.19. BBY envisages that re-rating of the shares will occur once the proving up of the coal resource is completed, once the necessary personnel have been secured to achieve construction of the demonstration plant and beyond, and once the demonstration plant reaches significant milestones.

This is an innovative project. There are risks enough associated with energy production companies that have long been involved in traditional forms of energy production. Production delays, cost blow-outs, infrastructure constraints, financing difficulties – the list goes on. And we are also talking about oil – who knows what might happen in either the short or long term future.

Potential investors are advised that this is a speculative stock and should be treated cautiously as such. It would be prudent to contact your broker, or speak to Linc Energy directly, before making any investment decision.
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http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=DCB1667B-17A4-1130-F573001DBFC7B7A4
 
Nouriel believes US housing slowdown the worst in 40 years > recession in 2007.

here is article;

"WASHINGTON (MarketWatch) -- The United States is headed for a recession that will be "much nastier, deeper and more protracted" than the 2001 recession, says Nouriel Roubini, president of Roubini Global Economics.
Writing on his blog Wednesday, Roubini repeated his call that the U.S. would be in recession in 2007, arguing that the collapse of housing would bring down the rest of the economy.
Roubini wrote after the National Association of Realtors reported Wednesday that sales of existing homes fell 4.1% in July, while inventories soared to a 13-year high and prices flattened out on a year-over-year basis.
'This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices.'

"This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices," Roubini said. The decline in investment in the housing sector will exceed the drop in investment when the Nasdaq collapsed in 2000 and 2001, he said.
And the impact of the bursting of the bubble will affect every household in America, not just the few people who owned significant shares in technology companies during the dot-com boom, he said. Prices are falling even in the Midwest, which never experienced a bubble, "a scary signal" of how much pain the drop in household wealth could cause.
Roubini is a professor of economics at New York University and was a senior economist in the White House and the Treasury Department in the late 1990s. His firm focuses largely on global macroeconomics.
While many economists share Roubini's concerns about imbalances in the global economy and in the U.S. housing sector, he stands nearly alone in predicting a recession next year.

"By itself this slump is enough to trigger a U.S. recession: its effects on real residential investment, wealth and consumption, and employment will be more severe than the tech bust that triggered the 2001 recession," Roubini said.
Housing has accounted, directly and indirectly, for about 30% of employment growth during this expansion, including employment in retail and in manufacturing producing consumer goods, he said.
In the past year, consumers spent about $200 billion of the money they pulled out of their home equity, he estimated. Already, sales of consumer durables such as cars and furniture have weakened.
"As the housing sector slumps, the job and income and wage losses in housing will percolate throughout the economy," Roubini said.
Consumers also face high energy prices, higher interest rates, stagnant wages, negative savings and high debt levels, he noted.
"This is the tipping point for the U.S. consumer and the effects will be ugly," he said. "Expect the great recession of 2007 to be much nastier, deeper and more protracted than the 2001 recession."
He also sees many of the same warning signs in other economies, including some in Europe
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Crazy any chance maybe that the below is right?

http://www.depression2007.com/

thx

MS
 
michael_selway said:
This might help solve the oil crises?



http://www.fnarena.com/index2.cfm?type=dsp_newsitem&n=DCB1667B-17A4-1130-F573001DBFC7B7A4
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The company says that the process is "five times more efficient than a coal burning power station". Given that a new black coal-fired power station has an efficiency around 40% and that the least efficient plant in service in Australia has efficiency around 27%, that's quite simply outright nonsense. You're just not going to get efficiency over 100% without some very "creative accounting".

As for the process, I can't see any reason to doubt that it works in a technical sense. But it's troublesome in terms of net energy yield and environmental impact.

The basic principle of coal gassification is anything but new. Reticulated gas for household use ("Town Gas") used to be produced from coal in Australian cities until 1964 (Hobart), 1969 (Bris, Melb, Adelaide), 1971 (Perth), 1976 (Sydney), 1978 (Launceston)) with those operations dating back to 1854 in Launceston (and even earlier in Sydney I think).

Whilst the process being used is different, it's coal gassification nonetheless. As for converting synthesis gas into liquid fuels, again nothing new. It dates back to the early 20th century as a technology and is the basis of virtually all methanol production (though that starts with natural gas as feedstock).

The questions relate to (1) financial viability (2) energy cost viability (if the yield is negative then it's pointless at ANY financial price) (3) scale and (4) environmental impact.

Point 1 is probably doable at a moderate price.

Point 2 is THE big question about this technology and even the company's statements aren't too encouraging with comments about not much more out than goes in. Given that what goes in must itself be source from (most likely coal) it does raise serious doubts.

Point 3 is unlikely to be sufficient within the next 2 decades to offset oil shortages. Simply a case of having to build too many plants too quickly as demand rises and conventional supplies at best plateau.

Point 4. Given that oil itself is a major source of greenhouse gas emissions, and that is the "easy" oil to produce, it is unlikely that this won't emit more greenhouse gases than conventional oil. Whether or not that matters really comes down to attitude - does the world do something about global warming or choose to ignore it? The answer there lies in the hands of China especially - their annual growth in emissions eclipses Australia's total emissions so there's basically nothing we can do apart from taking an in-principle stand that would achieve nothing in practice (since industry would simply relocate). Best guess is it takes a major crisis (probably a weather-induced global food shortage that sees significant numbers actually starve) to bring action. When is anyone's guess.

Personally, I think this technology will be used and will supply significant amounts of liquid fuels, but not on the scale that facilitates unrestrained growth in consumption as we've seen over the past century and a half. :2twocents
 
Smurf1976 said:
The company says that the process is "five times more efficient than a coal burning power station". Given that a new black coal-fired power station has an efficiency around 40% and that the least efficient plant in service in Australia has efficiency around 27%, that's quite simply outright nonsense. You're just not going to get efficiency over 100% without some very "creative accounting".

As for the process, I can't see any reason to doubt that it works in a technical sense. But it's troublesome in terms of net energy yield and environmental impact.

The basic principle of coal gassification is anything but new. Reticulated gas for household use ("Town Gas") used to be produced from coal in Australian cities until 1964 (Hobart), 1969 (Bris, Melb, Adelaide), 1971 (Perth), 1976 (Sydney), 1978 (Launceston)) with those operations dating back to 1854 in Launceston (and even earlier in Sydney I think).

Whilst the process being used is different, it's coal gassification nonetheless. As for converting synthesis gas into liquid fuels, again nothing new. It dates back to the early 20th century as a technology and is the basis of virtually all methanol production (though that starts with natural gas as feedstock).

The questions relate to (1) financial viability (2) energy cost viability (if the yield is negative then it's pointless at ANY financial price) (3) scale and (4) environmental impact.

Point 1 is probably doable at a moderate price.

Point 2 is THE big question about this technology and even the company's statements aren't too encouraging with comments about not much more out than goes in. Given that what goes in must itself be source from (most likely coal) it does raise serious doubts.

Point 3 is unlikely to be sufficient within the next 2 decades to offset oil shortages. Simply a case of having to build too many plants too quickly as demand rises and conventional supplies at best plateau.

Point 4. Given that oil itself is a major source of greenhouse gas emissions, and that is the "easy" oil to produce, it is unlikely that this won't emit more greenhouse gases than conventional oil. Whether or not that matters really comes down to attitude - does the world do something about global warming or choose to ignore it? The answer there lies in the hands of China especially - their annual growth in emissions eclipses Australia's total emissions so there's basically nothing we can do apart from taking an in-principle stand that would achieve nothing in practice (since industry would simply relocate). Best guess is it takes a major crisis (probably a weather-induced global food shortage that sees significant numbers actually starve) to bring action. When is anyone's guess.

Personally, I think this technology will be used and will supply significant amounts of liquid fuels, but not on the scale that facilitates unrestrained growth in consumption as we've seen over the past century and a half. :2twocents
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Thats true

http://www.fnarena.com/index4.cfm?type=dsp_newsitem&n=42A81483-17A4-1130-F50ACB68BE3E80A5

Ongoing Tightness In The Oil Market Supporting Prices
FN Arena News - August 25 2006

By Chris Shaw

Despite high stockpiles and few supply problems the oil price rose by about 4% in July to an average of US$74.37 per barrel for West Texas intermediate, thanks in large part to ongoing tensions in the Middle East.

In its August "Oil Monthly" update National Australia Bank notes these tensions should continue to support the oil price in the medium-term, particularly as the market is likely to remain tight thanks to ongoing increases in Asian consumption and some issues regarding supply increases.

The main issue from the supply side is where additional capacity is likely to come from, as while the International Energy Agency (IEA) remains of the view non-OPEC supply should increase particularly as Russia lifts its output, others including the bank are not so sure.

On IEA estimates Russian production should grow by 2.6% annually to a total of 10.8m barrels per day by 2010, while other producers such as Brazil and Angola should also lift output. But both the US Energy Information Administration and the bank suggest Russian output is unlikely to be significantly changed from current levels in coming years, the Administration pointing to ongoing nationalisation of the sector as limiting for new investment while the tax environment is not conducive to production growth.

If this more negative view proves correct it would mean OPEC would be responsible for increasing spare capacity from current levels of about 2.3m barrels per day to around 4.9m barrels, but again views diverge here as the bank sees limited potential for this when compared to IEA estimates.

On the other side of the coin, both the IEA and the US Energy Information Administration see Asian consumption increasing by about 2% annually through 2010, with China lifting its demand by about 5.5% to a total of 8.7m barrels daily and India increasing its demand by about 3.3% annually. As a result, global demand is forecasting to reach 91.7m barrels per day by 2010.

The result is the bank expects the market to remain reasonably tight for several years, so in the period 2008-2010 it is forecasting oil prices to range between US$50-US$65 per barrel. The risk to these estimates remains to the upside, the bank pointing out if producers cannot build in a larger production cushion in coming years there remains potential for supply shocks to push prices above current levels.

Only longer-term does the outlook improve, the bank estimating a long-term price of about US$45 is likely as ongoing higher prices should result in non-conventional production methods such as gas-to-liquids and oil sands to be developed.
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thx

MS
 
http://www.smh.com.au/news/Business/Economic-downturn-expected-in-2008/2006/09/11/1157826822680.html

When the Beijing Olympics are over?

Economic downturn 'expected in 2008'
Email Print Normal font Large font September 11, 2006 - 1:04AM

Advertisement
AdvertisementAustralia's economy is about two years away from a significant downturn, with a big dive possibly on the cards, a new report has concluded.

BIS Shrapnel says increasing business investment, largely from the booming mining sector, will help the Australian economy shrug off interest rate rises and keep growing strongly - but not forever.

"Basically what we're seeing is a rush to invest as many businesses have been caught short on capacity," said BIS senior economist Matthew Hassan.

But a significant economic downturn is expected late in the decade, Mr Hassan said.

"Businesses need to prepare for the downturn and governments should be doing everything they can to sustain activity and soften the blow," he said.

"The Australian economy is moving through a rolling investment boom that started out with housing, moved on to mining and business investment more generally ... with residential building set to chime in more strongly.

"But these cycles will start to turn down from 2007/08, with the cumulative effect sending the economy into slowdown."

Mr Hassan said the intensity of the downturn, at this stage, looks as if it will be mild.

"But there is a major risk that the investment boom will be stronger and run for longer, and be followed by a sharper downturn coming later in the piece," he said.

In the meantime, Mr Hassan said the current environment is "ripe" for investing, which he said will allow businesses to keep up with demand, shift to higher value production and reduce their reliance on expensive local labour.

According to BIS, Australian businesses spent $140 billion on capital items in fiscal 2006 and are on track to spend more than $155 billion a year for the next two years.

Most of the spending can be sourced to Australia's booming mining sector, which is enjoying unprecedented demand from China.

BIS Shrapnel said businesses are also making up for a lack of investment during the Asian crisis, the SARS outbreak and severe drought in 2003.
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thx

MS
 
"Boom and Bust is over", these words heralded the 1920's boom and the 1929 - 32 crash followed and ruined, not a few, but almost all who remained in the market. The exceptions being fixed interest and Gold, and it was the same in the 1973 - 6 slide. However, the 1987 crash finished off those gold investors, and those who chose fixed interest were dumped by high inflation well before that. The dot-com boom, once again, showed that no market can resist a crash.

Once there are forced sellers there is no bottom for some stocks until they hit zero.

It is more likely we are seeing a transfer from the mining and oil boom to the bread and butter stocks. It is my view that nervous investors are best holding at least half their portfolio in cash. Why nervous? - because they do not have a house that is paid for and a good certain income, so, if worse comes to the worse there is visible grief.

The trap we can all fall into is one of buying on the way down, afterall, if a stock was cheap at $2 it must be a steal at 50 cents. If an investor has borrowed then they must sell at 50 cents and soon 50 cents is expensive as confidence drops. Ask those who remained holding in the dot-com crash, some hold stocks, to this day that peaked, for instance, at $5 and still jog along around 10 cents.

What is risk? I see it in my own way. Stocks given a risk number of 1 if they are issued by strong governments who can print their own money - cash is of course 0. 10 if they are one of those current Uranium floats with hope their only asset ------- so, if you are 75% in cash and 25% in uranium floats, an extreme, then your average risk is 2.5. It can be seen that it's fun to invest in high risk with a strong fall back.
Having a fantastic job and a house that is paid for may push the risk back down further to 1.

Someone who has a job that is not secure, lives in rented property and has a portfolio of mostly hope and glory stocks, is riding a bike along a cliff edge. Some sadly even take the option of just going over the edge in a sadly depressed state.

Take care my friends in these volatile " boom or bust " markets. Remember, " It's never wrong to take a profit ". Will I take my own advice, hmm, probably only partly, then that's probably because I have a lot to fall back on. --- Good Luck
 
noirua said:
"Boom and Bust is over",

Someone who has a job that is not secure, lives in rented property and has a portfolio of mostly hope and glory stocks, is riding a bike along a cliff edge. Some sadly even take the option of just going over the edge in a sadly depressed state.
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One of the best quotes I have seen today. Add "those with big mortgages and/or leveraged stocks".
 
Following the coup in Thailand, it will be interesting to see if the ASX can resist a heavy mark down in a few minutes time.
 
michael_selway said:
The above guy is really a bear! although hes bullish on commodities, something i not sure why he thinks that way
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commodities and equities usually move in opposite cycles.
its no coincidence commodites had their last cycle from 1960s peaking at 1980 and the DOW was sideways between 1966-1982.
in the next few years (at most) one of them will have to give. most likely it will be equities IMO while commodities continue their upwards trend... :2twocents
 
nizar said:
commodities and equities usually move in opposite cycles.
its no coincidence commodites had their last cycle from 1960s peaking at 1980 and the DOW was sideways between 1966-1982.
in the next few years (at most) one of them will have to give. most likely it will be equities IMO while commodities continue their upwards trend... :2twocents
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oh ok, below (at the end) they talk a little about that, like the bull asks the bear why he thinks commodities will go up when everything esle will be bearish

http://www.europac.net/media/Schiff-CNBC-7-18-06_lg.wmv

actually I have another question, is USD collapses what happesn to Base Metal prices?

thx

MS
 
michael_selway said:
oh ok, below (at the end) they talk a little about that, like the bull asks the bear why he thinks commodities will go up when everything esle will be bearish

http://www.europac.net/media/Schiff-CNBC-7-18-06_lg.wmv

actually I have another question, is USD collapses what happesn to Base Metal prices?

thx

MS
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somehow don't think the USD is gonna collapse anytime fast. In the long term yes, in the short to medium term (1-2 years), IMO it will be trending up
 
noirua said:
We know the answer now in this post by m_s over two years ago. And so it came to pass.
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As the downturn starts to bite, it is businesses away from major Cities and towns that will feel the force of the cold winds.
 
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