What you may have missed in the business news last week:
1. The News You Probably Didn’t Miss.
There was a temporary last-hour resolution to the Debt Ceiling and the Government Shut-down which involved Republicans getting nothing for their efforts but general disdain from the voting public. The Democrats also got disdain – just less of it.
Ted Cruz is a cancer.
The link above is to the article that I wrote about it on Thursday.
Tony Abbott has tabled a bill to repeal the carbon tax in Australia. He’s told the Labour opposition party that they should “repent” of their support for the tax when they were in power, and help save the average Australian household $550 a year in lower electricity and gas bills.
Which is, frankly, nothing more than a claim. Forecasts are so easy to toss out and so flawed in their calculation – especially when you realise that there are a host of assumptions being used. That statement of saving should be something like:
“Assuming that companies pass on all their costs to their customers and no one competes with each other to reduce it and your household does not change its current energy usage to take into account the increased prices and that the mining boom continues and that everything else remains exactly the same, then each household could save as much as $550 per year. PS: you may be able to breathe less at some point, but no one really knows how to predict the future, and just ignore the fact that I just did with my $550 estimation because that’s beside the point.“
Here’s the thing about carbon tax credits: yes, they’re imperfect, but they’re better than nothing. Trying to reduce emissions is going to be an iterative learning process – so in order to improve that process, governments need to try things. There is reasonable theory to support carbon tax credits – so why not just let it play itself out?
Instead, Tony Abbott wants to intervene directly by offering financial incentives and subsidies to companies to reduce their emissions.
Alright fine. So let’s say that he tries that instead.
Well – he’s going to need to raise the money for those subsidies from somewhere. So will he, um, be charging Australian households to do it? Unless his expectation is that no company will be taking him up on his incentive offer…
Also, instead of using the money collected from such a carbon tax system to invest in renewable energy development and subsidise renewable energy schemes, that money is going to be given to mining companies; and only if they elect to lower their emissions.
Here’s a thought: just look at Germany. On June 16 this year, thanks to their renewable energy policies, the price of wholesale electricity in Germany actually went negative. And a number of coal and gas plants had to shut down as a result of the oversupply of wind and solar energy. Apart from those days, Germany just has really cheap energy in general.
Germany has a carbon tax credit system.
3. Apples trims its iPhone 5C order.
Apple have lowered their 5C production orders for the final quarter of 2013 in favour of higher 5S orders.
Which is actually good news – nothing like over-demand on your more expensive product.
4. The plight of JP Morgan Chase.
JP Morgan got hit with a $13 billion fine (sorry: “settlement”) for their part in selling mortgage-backed securities in the lead-up to the 2008 crisis. Fortunately for them, some of that settlement (which includes relief for home-owners) will be tax deductible.
Which does seem a little bizarre – but whatever.
Fun fact: that fine is larger than Namibia’s GDP.
Just for perspective.