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Daily Archives: April 17th, 2009

April 17, 2009 – 10:46AM

The global financial crisis threatens to spark a rise in cyber crime as computer experts lose their jobs and resort to illegal ways to earn a living, a senior official of Microsoft said.

“Today these (cyber) attacks are not about vandalism any more, today it’s about cash,” said Roger Halbheer, Microsoft’s chief security advisor for Europe, the Middle East and Africa.

“Cyber crime has gone from cool to cash. And this will definitely grow in the future,” he told AFP on the sidelines of an international conference on terrorism and cyber security.

It is “one of the things that scares me about the economic downturn because I’m expecting cyber crime will grow.”

He said the crisis had meant people with good knowledge of the industry were being laid off. “They then have time and they don’t have money,” he said.

“At the moment we are still at the cool side. But I’m expecting it to move to the cash side.”

He referred to the Conficker worm, believed to have burrowed into millions of computers around the world in the last few months, as a possible example of this “cool to cash” trend.

“What the goal of Conficker is is still unclear,” he said.

But criminals often create these “so they have a network of computers they control and then they try to sell their services to scammers and phishers or whatever … So it might well be that this is what the guy who wrote this (Conficker) is trying to do now.”

A task force assembled by Microsoft has been working to stamp out Conficker, also referred to as DownAdUp, and the software colossus has placed a bounty of $US250,000 on the heads of those responsible for the threat.

The worm, a self-replicating program, takes advantage of networks or computers that have not kept up to date with security patches for Windows.

It can infect machines from the Internet or by hiding on USB memory sticks carrying data from one computer to another.

“It is a pretty bad beast.., one of the worst we’ve seen in a long time,” said Halbheer. “It looks for a lot of different channels which makes it so dangerous.”

He said algorithmns used in the worm were first published in December and renewed in January. But Conficker used the first version and then updated it in January.

Microsoft has modified its free Malicious Software Removal Tool to detect and remove Conficker. Security firms, including Trend Micro, Symantec and F-Secure, provide Conficker removal services at their websites.

Halbheer also called for more collaboration between the private and public sector to combat cyber crime.

“A lot of critical infrastructure is owned by the private sector – the banks, telecom companies, energy companies. The government however has enforcement power as well as the intelligence power.

“We need to reach a state where we trust each other and exchange information.”

As an example, he said that a bank could come to the government and say “we’ve been hacked into but we don’t want to make it public.”

The biggest challenge to this is in countries “where you don’t have stable governments.”


Michael Pascoe
April 17, 2009 – 10:18AM

The commodities boom isn’t dead – it’s just resting. The commodities bubble is dead – and that’s a good thing. And just to make it a little confusing, China is playing a couple of curious hands in its long-term game of achieving resources security.

And that leaves the chances of the Australian economy suffering only a mild recession hanging tantalisingly over Wayne Swan’s head as he drafts next month’s budget.

There’s no shortage of headlines proclaiming not just that the commodities boom is over, but that we now have a dismal commodities crash. Plunging manganese prices are the latest exhibit, hard on the heels of lower coking coal prices and the on-going speculation about whether the key BHP and Rio iron ore contracts will settle 30 or 40% down on the 2008 year.

(Copper is proving a little problematical with its bounce of 40 to 49% from its lows, depending on what day you choose, but the pessimists are quick to say the price is still well below last year’s highs.)

But there’s a simple process that pricks the doomsayers bubble. First ask if Australia was enjoying a commodities boom in 2007 – the answer is “yes”. Then ask how the boom can be dead, extinct, kaput, an ex-boom, if prices in 2009 are above those of 2007.

That remains the furiously overlooked reality. The real story isn’t the collapse of prices in 2009, it’s that prices rode a ridiculous bubble in 2008 and have now returned to something more like healthy and normal.

The bubble was a lot of fun for those wanting to float an exploration company, the hedge funds that helped push up commodity prices and those who liked to play I-can-forecast-a-higher-oil-price-than-you-can, but it was a nonsense, by definition a bubble.

There were a clutch of projects and hopes built on the bubble being sustainable and they have been inevitably dashed. That happens with every bubble. But now some of the resources pessimism is in danger of being as equally nonsensical as last year’s optimism.

Certainly China is not behaving as if it believes the resources boom was all over red rover. If it did, it wouldn’t be suffering the hassles of whining Rio shareholders and nervous foreign investment review bodies, never mind the odour of propping up corrupt and criminal third world despots. And heavens knows there are easier ways to spy on Woomera.

China, like BHP, still has its eye on the long game – regaining what it sees as its rightful place at the centre of the universe. That requires on-going massive urbanisation – and raw materials.

Other emerging nations have their own ambitions that also require plenty of natural resources, but they lack China’s present ability and need to put their foot on them.

While today’s headlines might be about a dip in China’s latest quarterly GDP growth, Beijing remains on track to achieve greater growth in the long, medium and not-very-distant-at-all terms.

Along the way there is some confusion and plenty of room for speculation about what’s happening with raw material stockpiles as Chinese buying has been at odds with the GDP figures.

Copper the stand-out

Copper is the present stand-out metal, the extent of its bounce sending analysts in search of greater meaning. A UK Telegraph story canvases the possibility that the Middle Kingdom might be just buying commodities as an alternative to the fragile US dollar.

The paper quotes growing analyst opinion that there’s more to the Reds’ love of red metal than the present demand for copper wire.

The head of a Taiwanese commodities firm, Nobu Su, is quoted as saying the splurge is about Beijing trying to extricate itself from dollar dependency as fast as it can: “China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact and can cover their infrastructure for 50 years.

“The next industrial revolution is going to be led by hybrid cars, and that needs copper. You can see the subtle way that China is moving into 30 or 40 countries with resources.”

I’d argue there’s nothing subtle about it at all.

The Telegraph also quotes Macquarie Bank and UBS commodity chiefs as supporting the currency and US Treasury diversification story and references the interest of the head of China’s central bank in establishing a world currency based on a basket of 30 commodities.

That’s getting rather exotic for a world order not capable of really doing much at the London G20 despite the seriousness of the immediate crisis, but it’s another interesting card to place upon the table.

The immediate interest for Australia are the green bamboo shoots beyond China’s latest GDP figures. The Reserve Bank governor alluded to them after his last board meeting. Reports of record vehicle sales in China last month along with the commodities demand and bank lending are enough to keep Wayne hoping that the commodities boom that underwrote the past few budgets will indeed be there next year.

And no wonder Kevin wants a fibre optic rollout – we may not be able to afford copper.

Michael Pascoe is a BusinessDay contributing editor.–boom-not-dead-20090417-a9ab.html?page=-1

Friday, 17 April 2009

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A new report by The Australian Institute show there are significant benefits for working parents and the economy from paid maternity leave and has led to renewed calls from the ACTU for the Federal Government to include the scheme in the May Federal Budget.

The report, Long Overdue: the Macroeconomic benefits of Pail Parental Maternity Leave, shows that a paid maternity leave scheme would create 9000 jobs, and cut the net cost of the scheme by $225 million.

ACTU President Sharan Burrow said the report is further evidence that paid maternity leave must be in the next Federal Budget.

“Jobs are being lost and families are facing financial uncertainty. What this report shows is that paid maternity leave would help to remove that uncertainty by providing financial assistance to families in a way that would also benefit the Australian economy as a whole.”

“Paid maternity leave will provide highly positive outcomes to Australian families and the economy as a whole, that’s what this report shows.”

Ms Burrow also pointed to the “highly positive social and economic return for relatively small net investment, as has been outlined in the recent Productivity Commission report.”

“What this report from the Australian Institute indicates is that there are benefits to the entire Australian community through a national paid maternity leave scheme.”

“These highly positive outcomes can only be achieved if the Government includes a national paid maternity leave scheme in its forthcoming budget,” Ms Burrow said,

“Paid maternity leave will provide a solid foundation for economic growth by ensuring women retain a secure connection to the workforce while being able to take time out to have a baby.”

For more information please call Adrian Dodd on 0401 726 476.

By Geoff Easdown
Herald Sun
April 17, 2009 07:48am

ONE of the world’s biggest airlines yesterday reported a devastating decline in passenger numbers, underscoring the severity of the industry’s global crisis.

Singapore Airlines said its passenger and cargo loads across all routes in March averaged just 62.6 per cent – 7.4 points below break-even, The Herald Sun reports.

And last night American Airlines reported a $US375 million ($A523 million) loss for the quarter after sales fell 15 per cent.

”For the moment we’re not seeing evidence of either improvement or further deterioration in the business,” American’s chief financial officer Tom Horton said.

In another blow yesterday, one of China’s three major state-owned carriers, China Eastern, said it suffered a 15.3 billion yuan ($A3.02 billion) loss for last year due to fewer passengers, high fuel costs and a wrong bet on fuel-hedging contracts.

SIA’s March numbers showed why it slashed long-haul fares two weeks ago, starting a savage price war.

The figures indicated that most of SIA’s jets would have operated at a loss last month. Freight volumes were also in negative territory, with total loads falling 21 million tonnes and filling just 58.5 per cent of available space.

The release of SIA’s disastrous March numbers comes two days after Qantas shocked the aviation world by axing 1750 jobs, deferring up to 16 new aircraft orders and parking another 10 jets – taking the number it has mothballed to 20.

SIA, Qantas, Emirates and Cathay Pacific have been at “war” for the past two weeks after Singapore slashed Australia-London fares by at least 50 per cent.

SIA’s price cutting, seen as a last resort, followed an earlier range of measures after it reported a 42.8 per cent fall in net profit in its third quarter to December.

Flights to Europe, where SIA has sought to stimulate ticket sales with its new fleet of six A380 super jumbos, were worst hit.

European traffic fell 18.4 per cent to 69.2 per cent compared with March last year.

North American services were similarly hit, with passenger numbers averaging 68.5 per cent – down 7.2 per cent on a year-to-year basis.

Total passenger numbers fell about 388,000 to 1.3 million in the airline’s worst month since the credit crunch began last September. Flights to South West Pacific destinations, including Australia and New Zealand, and to East Asian destinations were the only services on which load factors exceeded 70 per cent, generally considered the point at which flights become profitable.

SIA told the Singapore Stock Exchange yesterday the global economic downturn had weakened travel demand and capacity would be cut 11 per cent over the next year.

The airline will remove 17 aircraft from service for at least a year. SIA has ordered staff to take paid and unpaid leave and early retirement,28318,25345819-5014090,00.html?referrer=email&source=eDM_newspulse

Tim Colebatch
April 17, 2009

AMID rising optimism that the global financial crisis could end sooner than expected, the International Monetary Fund has issued a new warning that the crisis is likely to be “unusually long and severe” and followed by only a “sluggish” recovery.

An analysis of past recessions in Western countries prepared for the IMF’s half-yearly World Economic Outlook, concludes that this recession, unlike those in recent decades, has several features that are likely to make it deeper and more protracted than normal.

The analysis, released overnight, finds that:

*Recessions that stem from financial crises endure longer and go deeper than those with their roots in macro-economic problems.

*Recessions that engulf the world last longer and are followed by weaker recoveries than those restricted to a single country.

*Counter-cyclical monetary policy is largely ineffective in tackling a financial crisis, but expansionary fiscal policy “seems particularly effective in shortening recessions associated with financial crises, and (in) boosting recoveries”.

*Developing countries are likely to face problems in accessing finance even after recovery sets in, as the new fear of risk among global investors will fade only slowly.

The fund’s warnings come after US President Barack Obama sought to rally American morale by talking of “glimmers of hope” in the US economy, while markets globally have enjoyed a sustained rally, raising hopes that the crisis might end sooner than expected.

It also comes as China reported a surprisingly strong rebound in investment in the cities, both in infrastructure and in property development.

The IMF analysis, commissioned well before any of these events, was released in advance of the half-yearly meetings of the fund and the World Bank in Washington next week. The IMF will release its updated Global Financial Stability report on Tuesday and its new forecasts for the global economy on Wednesday. Finance ministers will meet the following weekend.

It notes that by the end of 2008, 15 of the 21 richest countries were already in recession, on the simple definition of two consecutive quarters of negative growth. The IMF says all Western countries, including Australia, will end up there.

“The results (of this analysis) suggest that recessions associated with financial crises tend to be unusually severe, and their recoveries typically slow,” it concluded.

The IMF warned that “overleveraged economies” were unlikely to bounce back quickly through strong growth in domestic private demand, as they would require “a prolonged period of above-average saving”. It did not name them, but Australia is clearly one of them.

It again spelt out the case for a strong fiscal policy response, with the Government acting as the “spender of last resort” to break the negative feedback between weaknesses in the financial sector and the real economy.

“Given the shortfalls in both domestic private demand and external demand, policy must be used to arrest the cycle of falling demand, asset prices, and credit,” the IMF argued. “However, evidence indicates that interest rate cuts are likely to have less of an impact during a financial crisis … (whereas) fiscal policy can make a significant contribution to reducing the duration of recessions associated with financial crises.”

But even with “coherent and comprehensive action”, it concluded, “recovery is likely to be slow and relatively weak”.