Must be something in that iron. Fortescue mining boss Andrew “Twiggy” Forrest would be following in a grand tradition if he actually went ahead with the suggestion that he is prepared to back a new newspaper for Perth. Some 35 years ago those pioneers of the iron ore business Lang Hancock and Peter Wright were just as disgruntled with their local rag The West Australian as Mr Forrest and his mate Kerry Stokes are today. Messrs Hancock and Wright ended up putting their hard earned where their mouth was and purchased a whiz bang new printing press capable of full colour production (a novelty back in the late 1960s) and produced the Sunday Independent with the intention of it becoming a daily. A fine journal of record it was too although having assisted Max Newton in starting it for the iron ore men I guess I am biased. Alas the grand plans did not come to pass with Max borrowing a ship load or two of Canadian newsprint for his own eastern states ventures not helping the finances.

$US8 million reasons . The consensus of opinion seems to be that Hillary Clinton’s rally following the publicity given to Barack Obama’s church going friends has abated. On the Crikey election indicator Obama is now rated an 83% chance of being the Democratic Party candidate and most commentators are asking why Mrs Clinton does not retire from the race. Campaign adviser turned media analyst Dick Morris reckons he knows the answer to that question. He summarises why she will not quit in this way:

Hillary Clinton’s campaign currently owes vendors $8 million, exclusive of the $5 million she owes herself. She cannot use general election money to pay for this debt. If she begins to be anything less than certain that she will stay in up to the convention, she won’t raise any money and will be stuck with the debt. She also realizes that it is only by projecting an almost manic air of certainty that she has any chance at all of hanging onto super delegates. The first whiff they get of a withdrawal, they will all run screaming to Obama to get on the late train. Don’t think that Hillary is delusional. She knows she’s lost but she has no choice but to play the rest of the game. To fold now would leave her in an untenable situation.

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A market not a tax. A fascinating study by the International Monetary Fund on the economic costs of global warming has just been published and it actually comes close to explaining why it is that we are about to have an elaborate market for carbon emissions rather than a tax that would achieve the same purpose of reducing emissions. The chief reason, says the IMF in its report “Climate Change and the Global Economy” , is that taxes “may be politically difficult to implement.” This despite the fact that there are many reasons why taxes would work better. “Carbon taxes,” argues the IMF, “have an important advantage over cap-and-trade systems in that they result in a stable price for emissions (cap-and-trade policies seek to stabilize the quantity of emissions, but allow prices to fluctuate). Stable prices for emissions are critical for firms making long-term decisions about investment and innovation in low-emission technologies. Carbon taxes also provide for greater flexibility in the face of changing economic conditions, allowing firms to reduce emissions more during periods of slow demand growth and less during periods of high demand growth, when the cost of doing so would be higher. In contrast, cap-and-trade systems could give rise to volatile emission pricing when demand conditions change. Carbon taxes also generate revenues that can be used to enhance efficiency (by lowering other taxes) or equity (by compensating groups disadvantaged by the policy).” Arguments like that, however, are as nothing compared to the desire of politicians to blame some vague thing called the market rather than themselves for the decisions which will force up prices.

The house price trend. Along with that commentary on global warming, the IMF’s latest World Economic Outlook has a lengthy review of housing prices around the world showing that after several years of rapid price increases, the housing markets are turning down in several advanced economies. So far Australia seems to be doing better than most but there is an ominous look about the trends in the following graph:

The Daily Reality Check

Wayne and Kate are the couple of the day – clear winners on the most read list. Been quite a week for Wayne Carey really with previews of his Monday television interview, then the reviews, then the detailed analysis ending up with the separation. Politicians just can’t compete with this mix of football, cocaine, crooks and glamour.

The Pick of this Morning’s Political Coverage

You know a story has really captured the public imagination when another newspaper rewrites it and the rewrite within hours becomes the most read story on the web site of the rewriter. So it is this morning with the report by Adrian Rollins in the Australian Financial Review of the International Monetary Fund warning that the risk of a correction in Australian house prices is high because Australian property is among the most overvalued in the developed world. By 11am the AAP version of the Rollins story was the most read on The Age website.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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