The Gospel According to Fr Kennedy

Being both a former Brisbanite and someone who was brought up in a family with a strong connection with the Catholic Church, I have been following with some interest the struggle of Father Peter Kennedy, the South Brisbane priest, against the might of the Church establishment.

I left Brisbane for Victoria in 1992, so Fr Kennedy is unknown to me either personally or through association. However I am familiar with the South Brisbane / West End area and its eclectic population which includes indigenous Australians, inner city Yuppies, gay couples and Vietnamese immigrants to name just a few. In this diverse environment, it is unsurprising that the local parish priest holds the liberal views that Fr Kennedy clearly does. It is equally unsurprising, however, that those views have landed him in the situation he now finds himself.

To anyone with more than a passing knowledge of the Bible or Jesus Christ's teachings, the strictures of the Church seem puzzling, arcane and in the context of modern society, hopelessly old-fashioned and inappropriate. To an impartial observer, the Bible would seem to lay down fairly simple and sensible values for leading a moral and socially appropriate life (eg. thou shalt not kill; thou shalt not steal). So how did the teachings of the Church develop to the point where someone like Fr Kennedy who espouses socially good values such as tolerance, acceptance and love of the fellow man can land himself in such hot water?

Unfortunately the Catholic Church, like many other religious groups, is a very conservative organisation and social progress in broader society manifests itself very slowly in the Church's teachings. In fact, the Catholic Church makes someone like Margaret Thatcher look like a screaming progressive liberal.

To quote an some obvious examples, women (even Thatcher) have long been recognised as equals of men in almost all aspects of modern society, yet in most Christian religions and some non-Christian demoninations, their role remains quite limited and they are certainly forbidden from celebrating mass or becoming priests. Similarly, despite celebrants being allowed to marry in most other Christian religions, this remains taboo in the Catholic Church, sometimes with unfortunate results. Finally, artificial contraception is still forbidden by the Church despite it being desperately required in the context of an already overcrowded planet.

Understandably, Christ wasn't able to enunciate his position on matters like contraception or homosexual marriage and so it was left to his followers to determine how best to put his teachings into practice given the societal conditions of the day. Over 2000 years, this has led to some teachings and practices that have been very good for broader society (eg. its long and continuing struggle to help the poor and disenfranchised) and some that have been abominable (eg. the Spanish Inquisition). Quite probably, some of what it teaches was appropriate given the circumstances of the day but the controlling bodies of the Church have nonetheless been very slow to adapt its manifest to social changes. This is why in a world where you can exchange meaningful daily contact by email with someone in Irkutsk, a number of its teachings seem hopelessly out of place today.

Fr Kennedy would have been well aware of this when he signed up for the gig of a Catholic priest. His views as a socially-aware human being are to be commended, and in a number of ways, what he is saying fits the Church's official doctrine. However, in a lot of other ways, he does not and it is hardly surprising that the Church establishment has reacted the way it has.

Given the Church's attitude on a lot of things flies in the face of modern day common sense and their ability to gradually adapt over time to changes in society, it is possible and maybe even likely that the Church will eventually come around to Fr Kennedy's viewpoint. However, as long as Fr Kennedy purports to represent the Church, the Church should be able to reasonably expect that as a priest of that Church, he toe the line on teaching its doctrine. Such behaviour would be expected of a company employee, a member of the armed forces or a member of a club - either act in a loyal fashion to the organisation, or vote with your feet.

Unfortunately for Fr Kennedy, this is the choice he now faces - in fact, a choice which as of today, is being made for him. I wish him luck with finding a new forum for his preaching because as the saying goes, you can't fight City Hall.

Terrorists? What Terrorists?

One of the few positive side effects stemming from the global economic crisis is that the Australian government seems to have abandoned the fatuous obsession that its predecessor had with terrorism. Given the current problems facing the country, this is only to be expected - when real threats rear their heads, unimportant things get the disregard they always deserved.

But even assuming for a moment that we were still in good economic times and had the time and inclination to worry about terrorists, let's all acknowledge a fundamental truth:

In Australia, there is no terrorist threat.

Let's just say that again, so that we put any lingering hysteria to bed:

In Australia, there is no terrorist threat.


That's right, despite everything you might have read in the popular press over the last 8 years, the chances of anyone dying in Australia from a terrorist-related attack are as close to zero as you can get.

Unlike some mainstream hack journalists, I try as far as possible to verify the factual accuracy of statements I make on this blog. To this end, I undertook a study of the number of terrorist-related deaths that have taken place in Australia since my birth in 1967. Here are the results:

1967: Nil. However it should be noted that Australian Prime Minister Harold Holt did disappear under somewhat mysterious circumstances. There were rumours of abduction by a Chinese submarine, however analysing Communist China's policy during the late 1960s and early 1970s, Holt would seem to have had very little involvement in it. The facts would suggest that the notorious Portsea rip was to blame for his disappearance and not some Machiavellian Chinese plot.

1968-77: Nil

1978: Nil. Students of history may recognise this year as the year of the Hilton bombings in Sydney and the alleged "Ananda Marga" plot to blow up a Commonwealth leader's summit, in particular the Indian Prime Minister. Subsequent investigations and trials, however, were entirely inconclusive and the supposed ringleader, Tim Anderson, was eventually acquitted of all charges. The better view now seems to be that the attack was the work of unhinged, drug-addled losers and not the calculated work of a terrorist cell.

1984-2001: Zero. Null. Nada. Not a sausage.

2002: Nil. Abhorrent though the Sari club attack was, it was NOT carried out within Australia.

2003-2009: Australia to terrorists ? Anyone there?

In making my point, I don't mean to downplay the reprehensible nature of terrorism. No matter how fervent or righteous one's ideology, mass murder by any organisation or individual for political gain is inexcusable. Also I acknowledge that many Australians have been affected badly by terrorist acts, in particular the Bali bombing and the World Trade Centre attacks.

What I do question and object to, however, is the personal intrusions and massive waste of government money designed to minimise what is demonstrably a minimal threat to domestic Australians.

If you look at the major causes of death within Australia, terrorism rates somewhere between alien abduction and smallpox. Yet for some reason, the Howard government saw fit to print up hundreds of thousands of pamphletts and run multiple media ads highlighting the devastating threat we were facing and encouraging people to dob in a terrorist.

I mean, what a complete waste of money. Heart disease is a far higher cause of death in Australia than terrorism, yet Howard didn't see fit to leave bunches of leaflets in McDonalds or Hungry Jacks restaurants exhoriting the patrons to dob in a short order fry cook.

Why would the government do this? Well, consistent with the tone of pretty much everything Howard did during his time in office, the motives were cynical. He did it to reinforce his re-election prospects.

People may have forgotten that the 2001 election was shaping up as a close-run thing. The dotcom bubble of 2000 had burst, the economy was faltering and polls showed Kim Beasley catching the Liberals fast. Then hey presto, September 11 happened and all bets were off for Labour. When things like that happen, people get frightened, go into their shells and become very reluctant to do risky things like change governments.

Howard recognised this, and also recognised that a frightened, preoccupied and divided electorate is much easier to govern than one that is confident and engaged in the political debate. Running a huge scare campaign about terrorism was designed simply to reinforce this fear and make his job of getting away with murder (eg. making "non-core" promises) much easier.

There can't have been any other reason as the figures show that there never has been a real threat in this country. Let's be honest here. If you were a terrorist looking to make a name for your cause on the world stage, you are hardly going to bother with attacking Australia, are you? Much better to blow up something in a country like the UK or USA where the entire world is watching.

It's just as well that terrorists leave us alone, because if they didn't, we would be well and truly stuffed. The government has shown time and again it is way too clueless to protect us.

I like many others watched with a mixture of amusement and incredulity as a car done up by the satirical Chaser team to look like a Canadian diplomatic vehicle (but with them dressed as Islamic terrorists) managed to penetrate almost all the security barriers set up for the APEC conference and get within spitting distance of President Bush. I also suffer regularly the pathetic intrusion of airport security where you are forced to remove items of clothing, have your nail clippers confiscated and get scanned for gunpowder. But not to worry, after passing through this checkpoint you get to go shopping at the airport mall and buy everything you need to blow up a plane.

So, to all terrorists worldwide - thanks for leaving us be. I have but one request of you. Try taking a similar approach to the rest of the world that you do to Australia, and perhaps we can all stop this ridiculous war we have been fighting with an abstract noun. Not to mention enjoying simple pleasures like clipping our fingernails mid-flight.

Qantas Quandary

Given the current state of the Australian stock market, most investment decisions that were made 18 months to 2 years ago look pretty poor in hindsight. As such it's generally unfair to single any one fund manager or individual out, because pretty much everyone is in the same boat and has lost a lot of their client's (or indeed their own) money in this crisis.

However, as with every rule there are exceptions, and I would argue that the decision taken in 2007 by Balanced Equity Management and UBS Global Asset Management to scuttle the private equity buy-out of Qantas for $5.45 per share is one worthy of more scrutiny.

There are many arguments to be made as to why the private equity deal led by the now defunct Allco Group should not have been allowed to happen. The private equity model relies heavily on pumping a lot of debt into a company, stripping out costs then refloating the business in a few years time at a substantial profit - a model that in the current environment of low debt availability is not viable, particularly with a business like Qantas which is highly capital intensive. Questions abound as to what would happen with issues like maintenance, timely replacement of planes and safety were Qantas to be taken private and be run in this sort of business structure. There is also the question of the national interest, in that the government permit should arguably not permit an iconic brand like Qantas to be taken over and potentially run into the ground by a posse of deal-hungry bankers. Quite possibly, given the woes that have befallen the debt and equity markets, had the deal gone ahead, Qantas might now be itself be insolvent as the burden of its debt costs increased and banks sought to recover what they could from the company's carcass.

One must, however, query the relevance of these qualitative factors to a fund manager whose role is generally to secure the best return on their client's money and who must make the decision whether or not accepting the Allco offer was in the best interest of their investors. Some fund managers such as Australian Ethical Investment have briefs which go beyond the mere making of money, but given the nature of their organisations it would be surprising if Balanced and UBS had similar provisions in their mandates. Assuming therefore that their brief was limited to maximising monetary gain, were they acting in their investors best interests in rejecting the Allco bid - even in the face of fairly strident urging from the groups own Chair, the highly respected businessperson Margaret Jackson? I would say the answer is an unequivocal "no".

The reasons for saying this are rooted in the nature of Qantas as a company and the global airline industry as a whole. Relative to other industrial companies, airlines have a high degree of operational risk. The prospect of major mishap is an obvious one, but more insidious to the bottom line are factors such as fuel cost spikes, higher levels of union activity due to the number of staff they employ, virulent disease outbreaks such as SARS, increasing airport charges due to global airport privatisation and a high degree of leverage to economic downturns such as the current one due to falling levels of business and tourist travel. At the same time, they are operating in a highly capital intensive industry as planes need to be turned over regularly to meet international safety standards. In a market where capital is scarce, this is probably the greatest risk of all right now and helps explains this month's announcement of a substantial share issue to raise further equity.

You would ordinarily think a company facing this level of operational risk would be able to maintain high profit margins in order to compensate itself for taking on those risks. However this is simply not true of Qantas and airlines in general. While commercial air travel has grown at roughly double GDP pretty much since its inception, the industry is highly competitive in nature and the real cost of airfares has gone steadily backwards for at least the last 15 years. Airlines of course take measures to try and cut costs, improve efficiency and protect their margins - any long-suffering domestic Australian traveller will be able to attest to these - but the fact remains that an airline like Qantas will almost never generate a double digit margin on its revenue. This is a very thin buffer to have considering the risks that the business is exposed to, and if anything goes wrong, the impact on the bottom line can be catastrophic.

Despite all this (and I am speaking from a shareholder perspective here rather than a customer perspective), and especially when compared to overseas airlines, Qantas is very well run and profitable. Almost all of its American peers are in bankruptcy protection, while numerous Australian competitors have come and gone over the years, unable to make sustained go of it in what is a fairly brutal industry.

As a result of the risks which it has to face, Qantas's earnings per share performance has over the long-term been highly variable. Back in June 2003, after the fallout from SARS and the residual hiccups from the dotcom crisis, it reported a profit of 20 cents per share. Since then, it has enjoyed relatively favourable conditions and has reported EPS of 35.5 in 2003-4, 36.8 in 2004-5, 24.9 in 2005-6 and 34 in 2006-7. In 2007-8, just after the Allco bid was rejected, all the planets seemed to align for the company and EPS was a whopping 50.2 cents and with the shares trading for a few months above the Allco bid price. However since then some of the endemic risks that plague the industry (crippling oil prices; economic downturn; fresh competition) have come home to roost and it looks like returning to a 2003 level of profitability in 2008-9. This is before you take into account the dilution in EPS likely as a result of the recent capital raising it has undertaken.

So, how does one properly value a company like this? Typically, market players look at the long term profit growth prospects of a company and apply a multiple to its earnings (called a price to earnings, or PE ratio) to derive a fair price for the stock. There is one hard and fast rule to this valuation exercise but generally as a rule of thumb, a PE at or below 10 suggests negative earnings prospects for the company, while a PE in the high teens suggests strong earnings growth prospects. Given Qantas's long-term earning profile, and without this being a reflection on management at all, it is hard to argue that Qantas should ever trade on a multiple of more than 10 times its long term sustainable EPS, which would seem to be around 34-37 cents per share.

From this you derive a price in the order of $3.40 - $3.70, not too far away from where the shares have traded in a normalised market over the past 10 years. This is a long way below the Allco offer of $5.45 a share, which on current earnings expectation for 2008-9 would be a whopping 27 times earnings.

You have to seriously question in this context what logic Balanced and UBS used in order to form their view that the offer was undervalued - in Andrew Sisson's stated estimation, by as much as $1 per share. Did they think the nature of the airline industry or Qantas's position in it was suddenly about to change dramatically for the better? Did they think that the trend of constantly declining real airfare costs was going to reverse? Did they think despite constant protestations from management and the anecdotal experience of air travellers that Qantas has plenty of room to cut costs? Or, most naively and in spite of the lessons of history, did they think the stock market was going to go up forever?

None of their detailed reasoning was revealed publicly despite their constant complaints in the press about Qantas not being forthcoming with information. To this day we are left in the dark as to their logic, and with Qantas shares now hovering at around one-third of the Allco bid price, I am tipping they won't be volunteering this information any time soon as their assumptions are going to look fairly silly in hindsight. Nonetheless, their clients and their fellow shareholders in Qantas are entitled to an explanation, as they have been pretty badly let down.

I would certainly like one on behalf of my mother, who holds a substantial amount of shares in the company. I would encourage all other shareholders and clients of these fund managers to do the same.

Calling all Republicans

Interesting, I was surfing the net the other day and came across this leaked memorandum from Republican Party HQ ....


To: All Republican Congressmen

From: Republican Party Chairman


Subject: Our Return to Power


My fellow Republicans,

These are bleak times indeed. After being routed in the House and Senate elections last year, we now have a Democrat President in the White House as well. Oh, the shame of it. The sight of the new President parading on the steps of the Capitol exuding hope and goodwill to all ordinary Americans made my blood run cold. To make matters even worse, President Obama has announced a number of radical, socialist policy objectives that are entirely repugnant to the values that all good Republicans hold dear.

Make no mistake, if left unchecked, President Obama intends to implement the following policy initiatives:

• Withdrawing American troops from Iraq


• Ratifying the Kyoto protocol
• Paying more than lip service to the UN


• Limiting bank bosses' pay; and worst of all,


• Introducing a public health care system which will be affordable to all. No longer will the health insurers be able to deny a life-saving operation to an injured worker in cases where they desperately need to shore up their profits and maintain dividends to their stockholders.

Can you imagine, my friends, what effect these measures will have on our core consitutency? I would take this opportunity to invoke the immortal words uttered by Lincoln at Gettysburg that our government must be of big business, for big business and by big business. Or something like that. The exact words he used have been lost in the mists of time.

If President Obama gets his way, then the profits of those energy barons, defence companies and investment bankers who rely on us to look after their interests will be shredded. House prices in the Hamptons will plummet as bosses of insolvent banks are forced to live off $500,000 a year, and the shares of companies like Halliburton, Goldman Sachs and Tenix will sink even further than they have already as a result of President Obama's economic crisis. Ordinary working Americans will also (dangerously) start to believe that they can have a say in how the country is being run and make a difference. They might then stop worrying less about their monthly battle to pay the bills and start challenging the status quo.

Nevertheless, despite these grim tidings, we can all take heart. We all know that the Democrats, despite their control of Congress, epitomise the expression "all talk and no action". We know that with constant Republican attacks in Congress and enough scaremongering in the media, their resolve will very quickly falter, and we can manipulate their policy agenda to more or less resemble our own.

I have therefore set out some steps that all of you should take to ensure this dangerous President and his repellent agenda is headed off at the pass, and which will ensure that we set the scene for our return to power in 4 years:

• Dig up scandals: get private investigators to delve into the past of each of the President's key officials and try to find anything you can to discredit them. Then get the Fox Network to run the stories in the press. If you can't find anything, then just start scurrilous rumours about them. Fox have never quibbled too much about verifying facts before when there's an opportunity to liberal-bash.
  
  Hopefully, enough stories about adulterous affairs and non-lodgement of tax returns will generate a taint among Obama and his advisers, and make the public forget about the mess that Rumsfeld, Cheney and Rice have got us into in the Middle East.
  
  Unfortunately, the President himself is probably off-limits. Unlike JFK or Clinton, he seems to keeps his doodle in his pants and we won't get any mileage these days by attacking him on the basis of his skin colour (except maybe in parts of Alabama). Plus, godammit, he is POPULAR. Apart from a brain, charisma and eloquence, what does he have that good ol' George W. didn't?


• Run an emotive scare campaign about public health care being "socialised medicine": if we can get enough pictures of Russian doctors from the 1950s onto TV screens coupled with ominous shots of Stalin and Khrushchev, this might distract ordinary people from the reality of their crippling health premiums and the fact that we already have many perfectly adequate services in this country that are already socialised (eg police; fire; the army - and soon, the banks).
  


• Filibusters: while we are in the minority in both houses, we can still use filibusters to frustrate or stop legislation. Make sure you use these to hold up any bills that are likely to reduce our constituent's profits until the Democrats get frustrated and drop the bill as a bad idea.
  
• Financial crisis: wait a few weeks, then start blaming the Democrats for the current financial crisis. People have short memories and will soon forget that it was us who caused it .

So, my friends, there is certainly hope for a better future despite the situation we are in right now. Remember, despite what the voters say, the Republican Party is the ONLY party with the moral and legal authority to rule. We showed this in 2000 by successfully petitioning the Supreme Court and stopping the counting of votes that would have seen Al Gore elected president over Dubya. Thank heavens we did this, my colleagues - can you imagine what state the country would be in today if Gore had become President? No war on terror propping up defence contractors, no tax cuts for the super rich and an energy policy built on renewables which would have sent our supporters in the oil industry to the wall. The mind boggles.

A government of big business, for big business, and by big business. Don't forget it my friends. Now go forth and kick some Democrat butt.

Best Wishes

The Chairman

Hello all

After threatening to do so for some time, I've finally got round to setting up a blog.

Why bother, may you ask? Well, there are a number of reasons.

First and foremost, given everything that's going on the world, one needs a place to vent their spleen from time to time. Where better than on the Internet, where you can reach anyone with access to a computer and at least 50% of a brain.

Secondly, I would like to think that anyone with something worthwhile to say would eventually do the same. Control of traditional media has become centralised globally in the hands of a few arch-conservative moguls and as a result, it is now worthless as a forum for sharing ideas or challenging misbehaving governments or corporations. I believe people are disgusted by this and in time, other forms of media will invariably arise which are more representative of public opinion and which will report the truth instead of being beholden to a few powerful vested interests. There are signs that the Internet is already making inroads into traditional media, which is greatly encouraging.

Thirdly, someone said Facebook would we good for this sort of thing, so in good faith I went and set up a site. I quickly realised that Facebook is unadulterated pap. I needed to make amends. Fast. So, here is the blog. I hope you enjoy it.

Having a relatively demanding job, a house that seems to always need work and two school age children, posts will by necessity be sporadic and possibly, infrequent. However, when writing, I will try and cover a broad range of topics which I hope will be of general interest. Other posts (such as a eulogy for Fraser Gehrig) will be purely self-indulgent. Nonetheless I will strive to be entertaining, and where appropriate, controversial and puerile.

Blog on, or blog off.