Australian shares lose $170billion in value as crisis worsens
The Daily Telegraph
October 10, 2008 03:37pm



THE global credit crisis has claimed Asia's first major financial institution as stock markets in the region continued their free fall today.

THE Australian share market has lost about $81 billion so far today as the world crisis worsens and Kevin Rudd and Wayne Swan lobby global leaders for a co-ordinated response.

Falls here were mirrored around the region, with Japan's market down almost 10 per cent and Kong plunging 8 per cent today.

The turmoil in Japan led to a temporary suspension of trade in some futures options as the market digested news that one of the nation's largest insurers, Yamato Life Insurance, had gone bust with debts of $US2.7 billion ($A3.95 billion).

The collapse shattered hopes Japan might escape the worst of the financial fallout from Europe and the United States.

At the open of trade, analysts said it already appeared the Australian market was facing an ugly day, following another big fall on Wall Street.

Shares listed in the All Ordinaries index have lost approximately $170 billion this week - about $70 billion of that today.

At midday the benchmark S&P/ASX200 was down 282.3 points, or 6.53 per cent, at 4038.6, while the broader All Ordinaries had fallen 280.1 points, or 6.53 per cent, to 4011.2.

CMC Markets senior dealer Matthew Lewis said the local indices falling below 4000 points in trading this morning -- at around 11.30am -- had been a psychological blow to investors.

"It really is total market capitulation today.

"We've seen the market fall below quite a psychological level today, being the 4000 barrier, which is pretty important for the market,'' Mr Lewis said.

"It has bounced back a little bit since then but going below that is the lowest we've seen for five or six years.

"The damage is broad-based ... across all of the major sectors with the majority of the selling pressure coming out of the financials and also out of the materials sector.''

Macquarie Equities associate director Lucinda Chan earlier said the market was a sea of red.

"It is ghastly," Ms Chan said.

"We are down about five per cent but it is not too much of a surprise considering the US dropped about seven per cent overnight.

"Investors are buying up gold. It's the only safe haven out there, otherwise it's red everywhere."



IN other developments today:

TREASURER Wayne Swan is using a trip to the US to press the case for rebuilding confidence in global financial markets and Australia's proposals to reform regulatory systems.

Mr Swan has met financial market participants from major Wall Street institutions and will take part in an emergency meeting of finance ministers from the G20 group of leading economies in Washington this weekend.

He will also attend annual meetings of the International Monetary Fund (IMF) and World Bank.

"I highlighted the strengths of the Australian financial sector and the broader economy in my meetings today (Thursday)," Mr Swan said in a statement.

"The meetings were important in providing me with a real-time assessment of current financial market conditions and their implications for the US and global economy.

"I raised the importance of rebuilding confidence in the global financial system and Australia's proposals to reform financial markets and regulatory systems to promote future financial stability."

PRIME Minister Kevin Rudd has described as "uncoordinated" the global response to the international financial crisis.

"There has been a series of, at best, uncoordinated actions by various national governments on this and this has not created an overall image of international government consistency on these questions," he told ABC Radio today.

"Overall, what we face is a broader problem of a lack of a demonstration of global and coordinated political will to deal with some of the big regulatory challenges that we now face.

"And that, I believe, is a key part of the confidence equation and that must be addressed as the finance ministers meet in Washington this weekend."


http://www.news.com.au/dailytelegraph/stor...5001021,00.html

Capitalism survived Dutch Tulips, South Sea, Black Friday, The Depression, 1973 Oil Crisis, The Ressescion We Had To Have and Dotcom. Now it's mortgages. Somehow I suspect that capitalism will bounce back....

yah - because the socialists will bicker among themselves over trivia, escalate to assassination, move to full on show trials, then go all out & institute gulags & invade something, at which point the populace will go oh crap we've got hitler & stalin all over again & do something about it

a good time to invest in shares, ppl... although the market might have a ways to go yet before it reaches true bottom. I have the suspicion that any rises in the near future will be a case of "dead cat bounce", but who knows. We are in uncharted territories. But i largely agree, dachlo.

ok Economic Experts lol

is the death of capitalism for sure

Interest/Riba should be immediatlely placed on the list of international terrorists. It has single handedly destroyed the very fundamentals of capitalism. The enemy is within their midst, yet they see him not!

ABU Ahmed

Firstly, why exactly are people happy about the "death" of capitalism, considering we live in Australia? if a country were to go bankrupt i.e. iceland, pakistan (almost), it would not be a pretty sight, i.e. you can't draw money out of the bank, high unemployment, buying food, social problems.

Secondly, soon it will be a really good time to buy for the long term; considering that shares/property should be an investment with future gains in mind. Companies like woolworths etc. are going to be around; because people need to eat! When this bear market / turned recession recovers, the bull will rally up fast so make sure you aren't the mug punter who chases after the carriage after the horse has bolted. Whether it takes 1,2-5+ years we will live through this mess. Market sentiment is just so p*** poor at the moment and market participants are so short sighted and stupid it's not even funny. Lucky I liquidated the majority of my holdings well before this crap.

I'll be waiting for stocks and property prices to fall so I can scoop them up, i.e. mortgagee sales etc. No crime in profiting from people's stupidity and overcommitment! I did this in the slight real estate correction (15 or so %) a few years ago.

Interest did not destroy the fundamentals of capitalism; dodgy lending practices (and the securitization/aka bundling up/credit enhancement and inability to meet financial obligations by your average joe is what caused this.

Moral hazard/human greed and this whole 'keeping up with the jones' mentality the average australian/american has is what caused this problem. Where i'm from (asia) there is a concept called 'saving for a rainy day'.

People love to spend money they don't have, to impress people they do not know. Look at the US debt and you will see this.

Assalamu Alaikum,

What we are witnessing today is not just a random economic event. This economic crisis shows the flaws of capitalism, and could be the beginning of the end of capitalism. I attended a talk which explained many reasons for this current economic situation. It opened my eyes a lot and I realised that all this problems exist due to the capitalist doctrine. It's no secret that we see that the rich are getting richer, while the poor are getting poorer. The whole capitalist system is based on riba(interest) and credit, ie money that is created out of thin air so to speak. From an islamic point of view, it is already a failed system due to these two reasons.

Anyhow, we see that capitalism is based on greed. This whole system is about spending and living the so called "american dream", ie getting a house, a car, a family and more and more material goods. This idea leads people to greed, as people want to get more and more money for themselves, not worrying about others. For example, if I have a one storey house, this society tells me that one storey is not enough, then I decide to get a two storey, and this keeps on going on till you die. We see that in this capitalist society, the welfare of people is not really important, a complete distinction to the islamic economic system, which is all about looking after the society as a whole. There is a huge gap in the capitalist society between the rich and the poor. Instead of spending billions of dollars to find a cure for AIDS, these pharmaceutical companies spend billions of dollars making anti ageing creams, anti pimple creams and what not. All because there is a market for these creams. It doesn't bother them that million are dying, in Africa expecially, of various diseases. What matters at the end is the amount these capitalist make.

On the other hand, the islamic economic system provides solutions to mankind. Its aim is not profit, rather, to help society advance, not just look after a few, very rich individuals, so that everyone can live a comfortable life. There was a time during the caliphate of Umar Bin Abdul Aziz, where there was not one single poor person in the state, which stretched from spain to the east. The economic advisors to the Caliph, did not know what to do with all the extra money in the bait ul mal.

As muslims, we should be trying to export the idea of islamic economics, as this will be the solution to all the problems that exist in today's world. This economic crisis has left even the top economists dumbfounded. Insha Allah, the Islamic State will return, and solve all mankinds problems. Because, without political power, nothing can be achieved.

Wassalam.

Assalamu Alaikum,

What we are witnessing today is not just a random economic event. This economic crisis shows the flaws of capitalism, and could be the beginning of the end of capitalism. I attended a talk which explained many reasons for this current economic situation. It opened my eyes a lot and I realised that all this problems exist due to the capitalist doctrine. It's no secret that we see that the rich are getting richer, while the poor are getting poorer. The whole capitalist system is based on riba(interest) and credit, ie money that is created out of thin air so to speak. From an islamic point of view, it is already a failed system due to these two reasons.

Anyhow, we see that capitalism is based on greed. This whole system is about spending and living the so called "american dream", ie getting a house, a car, a family and more and more material goods. This idea leads people to greed, as people want to get more and more money for themselves, not worrying about others. For example, if I have a one storey house, this society tells me that one storey is not enough, then I decide to get a two storey, and this keeps on going on till you die. We see that in this capitalist society, the welfare of people is not really important, a complete distinction to the islamic economic system, which is all about looking after the society as a whole. There is a huge gap in the capitalist society between the rich and the poor. Instead of spending billions of dollars to find a cure for AIDS, these pharmaceutical companies spend billions of dollars making anti ageing creams, anti pimple creams and what not. All because there is a market for these creams. It doesn't bother them that million are dying, in Africa expecially, of various diseases. What matters at the end is the amount these capitalist make.

On the other hand, the islamic economic system provides solutions to mankind. Its aim is not profit, rather, to help society advance, not just look after a few, very rich individuals, so that everyone can live a comfortable life. There was a time during the caliphate of Umar Bin Abdul Aziz, where there was not one single poor person in the state, which stretched from spain to the east. The economic advisors to the Caliph, did not know what to do with all the extra money in the bait ul mal.

As muslims, we should be trying to export the idea of islamic economics, as this will be the solution to all the problems that exist in today's world. This economic crisis has left even the top economists dumbfounded. Insha Allah, the Islamic State will return, and solve all mankinds problems. Because, without political power, nothing can be achieved.

Wassalam.

On the contrary this economic crisis was predicted by many economists over a year ago (well over a year by some of them).
There's no doubt it exposes some of the flaws in capitalism but it doesn't follow that it's a death knell for capitalism.
Frankly to say that capitalism is based on the American cream demonstrates a woeful ignorance of the history of liberal economics - it might be more accurate to say that the American dream is based on capitalism.
If you want to predict the end of capitalism you need to base it on more than the things you have watched on youtube.

Bullish, Woolworths is an unacceptable investment for Muslims because it sells alcohol but in general I agree that now is a good time to pick up some some goodies for your portfolio.

QUOTE (imti7 @ Oct 11 2008, 01:16 AM)

What we are witnessing today is not just a random economic event. This economic crisis shows the flaws of capitalism, and could be the beginning of the end of capitalism. I attended a talk which explained many reasons for this current economic situation. It opened my eyes a lot and I realised that all this problems exist due to the capitalist doctrine. It's no secret that we see that the rich are getting richer, while the poor are getting poorer. The whole capitalist system is based on riba(interest) and credit, ie money that is created out of thin air so to speak. From an islamic point of view, it is already a failed system due to these two reasons.

Anyhow, we see that capitalism is based on greed. This whole system is about spending and living the so called "american dream", ie getting a house, a car, a family and more and more material goods. This idea leads people to greed, as people want to get more and more money for themselves, not worrying about others. For example, if I have a one storey house, this society tells me that one storey is not enough, then I decide to get a two storey, and this keeps on going on till you die. We see that in this capitalist society, the welfare of people is not really important, a complete distinction to the islamic economic system, which is all about looking after the society as a whole. There is a huge gap in the capitalist society between the rich and the poor. Instead of spending billions of dollars to find a cure for AIDS, these pharmaceutical companies spend billions of dollars making anti ageing creams, anti pimple creams and what not. All because there is a market for these creams. It doesn't bother them that million are dying, in Africa expecially, of various diseases. What matters at the end is the amount these capitalist make.

I know what you're getting at, but I think you've labelled it wrong; that's consumerism you're talking about.

capitalism is based on the premise that industry, and trade be privately owned for individual profit rather than by the state or government. the money lending system (mortgages and the credit system) are based on interest & usury, which is the main cause of this financial meltdown. the base premise of capitalism is compatible with Islam. the Western idea of credit lending system is not. though you're right that consumerism does play a big factor - if people weren't so pressured into buying new things, they'd save their money and not have to go into debt just to get what they want. and if banks didnt charge interest, some people would at least be more equipped to pay off their debts. some people can pay more than double the principal on a loan just because of the interest.

QUOTE (imti7 @ Oct 11 2008, 01:16 AM)

On the other hand, the islamic economic system provides solutions to mankind. Its aim is not profit, rather, to help society advance, not just look after a few, very rich individuals, so that everyone can live a comfortable life. There was a time during the caliphate of Umar Bin Abdul Aziz, where there was not one single poor person in the state, which stretched from spain to the east. The economic advisors to the Caliph, did not know what to do with all the extra money in the bait ul mal.

As muslims, we should be trying to export the idea of islamic economics, as this will be the solution to all the problems that exist in today's world. This economic crisis has left even the top economists dumbfounded. Insha Allah, the Islamic State will return, and solve all mankinds problems. Because, without political power, nothing can be achieved.

remember poor(er) and rich(er) people will always exist in a society, even in an Islamic one. its just a natural given, which is why Zakaat is one of the 5 pillars. Islam doesn't forbid outright one's right to pursue enterprise and business, but it discourages recklessly giving into the pleasures and goods of the world - something America and most of the Western financial system has unfortunately given into.

Why should banks lend out money for no return? What if these people do not pay back their principle? Shouldn't banks be compensated for risk? I think too many people think banks are the salvation army or some kind of charity organization.

I do agree with some points brought forward, i.e. this whole 'keeping up with the jones' mentality (which afflicts too many Australians) these days is so wrong, but people's greed and incompetence is not the cause of capitalism.

Imti7: Last time I checked, in Saudi Arabia and Dubai, which are both islamic states - modesty and "lack of greed" is nonexistent.. we are talking about gold plated ferraris, gold plated toilet seats for goodness sake, ordering exotic sports cars by the dozen, this whole "my development tower is bigger than your tower" fiasco going on. In fact I thought gold and showing off was forbidden in islam? We are being to naive to believe that there is such a simple solution to society's problems.

Even if the intentions are well, all it takes is for the haves (in any society) to bend the political/religious situation to exploit the have-nots. This is human nature. As for the flamboyance in the richer gulf states, this is common knowledge.. not to mention I have witnessed this first hand in my travel and even correspondence to internet friends (from dubai) on car forums. I used to chat quite regularly with
a young man who had a car collection that most people could not even dream about; we are talking about cars which are not even production...

http://au.youtube.com/watch?v=uJW8jKZ1n-M&...feature=related

Some sheikh's private collection... cars worth more than enough to feed a small country:
http://au.youtube.com/watch?v=0GKjt04sshU

I'm not hating on him. He earnt his money he can spend it on whatever he wants.

There is a victim mentality we see in society in regards to how more affluent people SHOULD bail out poorer people and this whole shifting the blame for an individual's lack of success on greater society. We are fortunate to live in countries where if you really want to go out and make it, you have the opportunity to do so. Why should say a specialist doctor, who spent 10+ years studying and living like a pauper not be able to live a more luxury lifestyle because he/she is able to do so?; delayed gratification. Some of the comments here are almost advocating communism. In any society we are going to have rich and poor people. What the rich people do with their money to help others is often overlooked; although they do not have an OBLIGATION to help society. In fact warren buffet and bill gates (some of the most well known 'capitalists' are most likely the most philanthropic people in the world.. at least more so than all of us on this forum combined.

While I do believe that some people are unfortunately dealt a bad hand of cards in life, there is are plenty of scnenarios where people go from owning nothing to being financially successful because they busted their backside to achieve their goals. Nothing ever stopped us from being a go getta and actually making something of themselves instead of blaming others; which is the easy way out.

In society there are going to be lazy people/dole bludgers who don't want to work hard; why should my hard earned dollars go towards providing handouts for these people? With that being said, I regularly donate to charity, have been involved in youth work; the difference is that it is out of my own free will and I am able to do so because I made allot of sacrifices when I was in my teenage years. I worked full-time while studying (not a glamour job either), didn't go out, scrimped and saved every penny for more than 5 years in total (undergraduate and postgraduate degrees) and eventually took up a lucrative career in investment banking.

While I don't condone the dodgy lending practices by allot of american banks as of late; it is very easy to sit on the guidelines and criticize. Again I bring up the point of the ridiculous consumerism seen in dubai and saudi arabia; where the oil barons own 99% of the wealth and there is basically modern day slavery as seen by the indian workers there.

No system is perfect, and due to the corrupt nature of humans, the flaws of any system can be exacerbated. Even if there were a perfect system, human beings (esp Americans) would find a way to screw it up for the rest of us.

Don't get me wrong I have been trying to educate myself about islamic finance in my spare time recently. To me it bears similarities to venture capital / private equity financing. I think that it is more socially responsible in the projects it allows; but I am still unsure about it's applications on smaller scale/retail investments. I also find it more limiting from my reading so far, in terms of the projects which one can accept.

This is true about woolworths (selling alcohol, pork products which is strictly haram), companies dealing with gambling i.e. aristocrat, tabcorp even some logistics in transport of alcohol (profiteering). Depends on how strict somebody wants to be towards their faith.

I think it's great if people follow their faiths accordingly as in many circumstances they better morals etc. It is too common for people to pick and choose what they like in religion these days.

Well done for following your dreams. However many people have worked just as hard as you, scrimped and saved, and actually do a job for the community which is in all effects selfless. You talk of specialist doctors.... I know a GP personally who earns $90k, works in a poorer part of Sydney, has 25 years experience, and can't accept more patients because he is so busy. He would have studied more than you and has helped literally thousands of people face-to-face. Meanwhile we have CEOs taking home many millions per year, Morris Iemma 'earning' $150k per year for life, plus (undoubtedly clever) 25 year olds being rewarded by society for lining their own pockets (and garages).

You talk of keeping up with the jones, but sorry, it appears you too have effectively done the same thing in regards to your job... not just kept up, but sounds like you have gone way past the average Joneses. When I was in my early 20s I was on track to become extremely well paid in the advertising field but couldn't reconcile the lies and promotion of business that I literally couldn't stomach. In fact, my thought in my early 20s was this - to 'sell my soul' for 10 years or so, make a truck load of money and then get out. However, I decided to get out early and follow a path that has definetly not been as well paid but at least I can be proud of what I've done.

Of course every society will have rich and poor - its the ever widening gap which concerns many people.

Either teachers, child care workers, nurses, emergency services, old age carers etc should be better paid OR professions like yours should have their pays reduced/and/or taxed more. I don't know if you've been to an old-age home but many of the people that work there would be on less than 50k a year. To see the work they do and care they show is one of the most humbling experiences. And many of these type of workers can't even afford the rent or mortgage near the places they work. Its a shame more investment bankers don't get to see the work these people do until their own parents grow old, and have already blown lots of their money on their Mercedes and BMWs.

Look, I don't regret you your personal success as an investment banker, but at least be honest, your actions have most likely helped sustain many businesses that often lie, cheat and pollute the communities and environment in which they operate, and to ensure shareholders get a return. Good on you for donating to charities, but too many of your type don't and think that just because they studied for 4 years at uni and lived in a share house that they are then entitled to absolutely ridiculous pay far and above what equally talented people in our society get. Mind you, I'm not advocating communism at all, just some equity - the pays of many company directors and CEO's are (in my opinion) simply criminal.

Perhaps the ridiculous pay is meant to replace the souls many seem to have lost.

Don't know if anyone saw this in yesterday's paper, but it certainly looks like Islamic finance is going from strength to strength:

http://business.smh.com.au/business/islami...81010-4yft.html

"A thriving financial sector sounds like an oxymoron these days. Even Australia's banks - among the most profitable in the world - kept a fifth of this week's interest rate cut to cushion their margins. But there is one sector that has tongues wagging in the hubs of commerce: Islamic finance.

While the Western world's financial system has been imploding, this small but rapidly growing share of world capital has weathered the storm.

Sharemarkets in London and New York are a third off their peaks. Dow Jones's Islamic financials index, in contrast, rose 4.75 per cent in the most recent September quarter and lost a modest 7 per cent in the previous year.

Not only has the industry been resilient; it's also on the cusp of serious expansion. It is growing faster than any other subset of world banking, at 15 to 20 per cent a year. The Economist estimates Islamic assets under management are worth $US700 billion ($1000 billion). This figure could hit $US1 trillion - about the Australian sharemarket's current value - by 2010.

What's more, all this growth has come from a model of lending that rejects interest payments and shuns speculation and heavy borrowing.

In short, Islamic finance bans some of the excess that has brought the West's financial system to its knees, and is looking wise indeed, or at least lucky."

(article continues at smh.com.au)

If your friend is a GP has been working for 25 years and only on 90K a year I think he is severely underpaid.. I am not a doctor, however a few acquaintances are and they definately earn 6 figure+

The going pay for a first year investment banker is $90,000 base + mid year bonus + annual bonus (capped at around 100% at this level) for example; hence why I have heard of MD's going into this field.

With that being said however, a family friend of ours is a psychiatrist and to my knowledge his wage makes the average lawyer/banker's wage look like chicken feed. Note i mentioned a specialist; he makes something couple hundred dollars an hour no joke...

I have worked in a team to help finance multi million dollar deals; I was involved in a huge airport deal for example. I do agree that some salaries may appear somewhat stratospheric, however I believe that Allan Moss earned every part of his multi million dollar salary.

He has been loyal to the bank for over a decade, and oversaw it's expansion from a somewhat boutique investment firm to the powerhouse it is today!

I.e. a CEO is like the captain of the ship; he has the utmost responsibility; if he steers the ship in the right direction and generates billions of dollars of profit, I believe he is entitled to executive remuneration!

Also, if the company doesn't pay the going rate for a CEO, another company will; and hence they will lose talent; another case = another COUNTRY will; thus poaching local talent.

While I do I agree that plenty of average people may work just as hard, they do not have the same responsibility as someone in such a position of power. (ok I might get buried for this, given the current economic climate). Life is about working smart, not just hard. I.e. working 100 hours cleaning dishes, vs:

Mind you in my younger years I have stayed back at the office as late as 2AM... Even these days when there is live deal activity I am in the office till late.

I really do respect that you have not been tainted/sold your soul for $.. Money to me and making it is my #1 goal in life.. I guess I have sold my soul a long time ago?

My justification is that there is nothing stopping someone from being whoever they want; hence the beauty of this country I guess.

I do admit that firemen, police, etc. especially nurses are severely underpaid. I always wanted to be a fireman when I was younger, but I realized that the pay was inadequate + pressure from my chinese parents I would be forced to be a doctor/dentist/accountant etc.etc.

If they don't mind, i.e. they do it for the love of the job/philanthropic reasons; I commend that. However if people knowingly work in a role which pays poorly and still complain, then it was their own decision to take that role. If you know what I mean? Sounds horrible I know..

Hey Bullish - again i say good on you for following YOUR dreams.

I heard on the radio yesterday that not long ago, the executive pay was 20 times the average wage. Now it is upwards of 200 times the average wage.

It is the massive gap in wages that gets up peoples noses. You talk of losing talent overseas and yes that is true... massive pay discrepancy distorts things all over the economy - why do we have public servants in NSW earning way more than the Premier who is effectively their boss? No wonder we get the jokers as politicians we have now.

You talk of base salary being $90k for an investment banker in the first year + 2 bonuses... thus making $150k a year. This is good for the people who get the pay but is way more than a doctor gets as an intern PLUS a doctor has to work 80-100 hours a week for it after 6 years study. You talk of specialists - the reason doctors are attracted to become specialists is because the pay is way more than they get as GPs... unless of course they are the sort of GPs who sell their soul and become a prescription writer churning people through their door every 3-5 minutes. So thus we have good doctors at the coal face being lured by the dollar - not by the joy and challenges inherent in helping people through some of the most dramatic moments in people's lives ie birth, death, children etc. Look, I'm the first person to tell my friend that he's underpaid! Its embarrassing to know what he does for the community and know how society 'rewards' him. But he is just one of many people in all sorts of positions whose job is ESSENTIAL in the community but are inadequately paid in comparison to people like investment bankers. Have you ever wondered why there are so many mediacl centres nowadays, with 4-8 GPs working together in one practice? Its not because the doctors have found a new way to provide patients with a better service - its because its the only way to make adequate money in general practice. Unfortunately my friend works by himself - the 'old fashioned' way... but in actual fact the best way to know all about the patients he treats and therefore provide them with the best service possible.

You also talk of working smarter - not harder... I work a couple of days a week and earn a little more than the average wage. I consider myself lucky. And you? "$Money to me and making it is my #1 goal in life.. " This says it all. No wonder you're interested in the spiritual side of things by visiting this site.

its ok folks ... Arnie says everything will be ok

Don't Be Economic Girlie Man

^



too funny.

gotta love arnie.

Arnie is funny lol

Australia has one of the best regulated bank systems in the world..

Yeah and 10 years ago everyone was crying to de-regulate them hahaha

Thanks for the kind words.

I agree that the executive pay may seem excessive, however one needs to realize that with money and position comes responsibility.

Allot of people drop out in year 10 and work cruisy 9-5 jobs and complain about executive remuneration; I honestly believe this is wrong. I do like the NIKE model of business, whereby remuneration is 100% based on performance; but this is why we get executive stock options; if we perform poorly, the stock price will fall, causing my call option to be worthless for example.

Golden handshakes are controversial I will admit, people getting paid for stuffing up.

The government jobs are moreso a joke, with people retiring on a 150,000 perpetuity... Yet they have a nerve to try to slash banker salaries; let me ask if kevin rudd screws up will he get his pay cut?

The investment banker starting salary is said to be excessive.. but this is the going rate, and believe me when you factor the number of hours I put it when I was at the 'grunt' level, someone at macdonalds probably earner more on a p/hour basis. We basically all hang in for the bonuses, because it is a lump sum.

In regards to jobs which are deemed underpaid and beneficial, I wholeheartedly agree with you; i.e. nurses, ambulance etc. but life isn't fair and I truly believe one has to be ruthless to get to the top. Nothing stopping your friend opening up a practice, having other GP's working for him; in true entrepreneurial spirit. I guess it depends on what his intentions are; if he is truly adamant about benefitting society, I have nothing but respect for him; but if he is complaining about his financial situation, the question is why isn't he doing something about it and that only he can change his situation.

You are smart by working less and earning more than the average person. I think there is nothing wrong that you have rewarded yourself by using your brain. We all could be drones to society or even worse sit on our bums and bludge off the welfare payments, but the reality is that you and I got off our backsides and made it happen; mind you executives pay allot of tax, so our salaries aren't as pumped up as the media likes to portray.

I will admit that the spiritual side is a work in progress; I can honestly say that majority of people in my field are like Gordon Gekko from wall street. It comes with the business but I don't do anything illegal or go out of my way to hurt people; I still consider myself a decent human being, I am quite humble and I guess I'm working on the greed/materialism! It doesn't help coming from a chinese family, whereby our religion is basically money...

the basic assumption is that there will be enough people who are forced or choose to take the low paying jobs that any society needs in order not to collapse.

Super post bullish!

Just a few responses...

A little bit on McDonalds - I've been told I pay my casuals way above what Maccas pay. Currently I'm paying their age per hour ie; a 16 year old casual gets $16/hour. At Maccas they get $8/hr or so. Honestly i don't care what Maccas pays. It's what I'm comfortable in paying them. I'd feel exploitative paying them $8/hr. Doesn't even pay for their transport hardly. Business for me is not seperate to my life - the ethics remain exactly the same. I also don't have credit with suppliers - i pay them when I get the goods. I treat the relationships in my business as I would like to be treated.



I undersand life isn't always fair. Thats why society should work to change what isn't fair to make it fair! And currently, the pay discrepancies between the essential services in our comunity and those jobs that simply make profit are completely out of whack. Reduce the slaries of jobs like investment bankers, or increase the pays of people doing essential services. A paramedic or doctor I would argue has WAY more responsibility than virtually any merchant banker. He's got life in his/her hands.

My doctor friend doesn't complain at all - he absolutely loves his job!! It's just me and a few others that know his pay that find it embarrassing. And I'm sure some of his patients would too if they knew!! But he knows he's providing the best service to the community possible. To do it differently would mean a deterioration in the service - ie: noone but he knows the medical history of his patients as well as he does. The entrepeneurial spirit when it applies to a doctor like him is just ridiculous. The real good doctors dedicate their lives to helping the community. For them it's a calling that they just couldn't give up.



Spirituality is a work in progress for kme too!! lol!! and I have lots of dealings with Chinese - my dad lived there for business for a number of years... the scale of progress over the past decade has been simply mind-boggling. Its not just me that thinks the next century will see the rise of China as the major superpower. I just hope that they don't make the same mistakes as the USA!!

A kick in the teeth - just what the doctor ordered

http://www.smh.com.au/news/opinion/a-kick-...ge#contentSwap1
Tanveer Ahmed
October 28, 2008

Naively, I pursued a career in medicine partly because of money and then spent the past decade plugging away in impoverished public hospitals. Watching my peers in financial circles make squillions has been painful. I pretended not to care, that I was fulfilled in a job with a greater innate value.

But the warm, fuzzy feeling meant to come from helping the poor and the elderly did not dent my mortgage. I felt like a charity worker, receiving pats on the back for sacrifice but little in the way of social status.

Friends who performed moderately in school were earning several multiples of my salary and jetting around the world like kings, cutting deals and winning massive bonuses. The business deity Jack Welch, former chief executive of General Electric, said Wall Street "was the biggest group of mediocre people making the most money".

I yearned to be one of them.

My financial friends - the ones who used to scull beer and headbutt one another playing rugby - have truly inherited the earth. Their world has become our world. Where was my career counsellor when I needed him? Nobody pointed me to the burgeoning boom in global capital and its offshoots. I don't remember hearing the term investment banker until I was 25. Only months ago, I thought subprime was a cut of dodgy meat, and I was on the losing end of the spoils of globalisation, trapped in the dwindling public sector in an age of Milton Friedman-inspired Reaganomics.

And now this. Despite the understandable schadenfreude in seeing them and their rich clients lose millions of their stupendous wealth, the financial chaos underlines how the modern language of money and markets dominates our consciousness.

Money is unique in human affairs. It serves no biological purpose but permeates almost every aspect of modern existence. In its simplest form it is merely a tool. But in its modern form it has become a symbol of secular salvation, of freedom and status, and is even embodied with a moral worth.

Ayn Rand, the libertarian philosopher, said "money demands of you the highest virtues". She defended the moral worth of making money because she admired the productive, rational, independent person. By making money, economic agents spread trade, values and prosperity.

Her views are central because Alan Greenspan, the former governor of the US Federal Reserve, was Rand's most famous ideological protege. His suspicion of any government intervention in financial markets is believed by many to be the central contributor to the current crisis. Greenspan admitted as much last week. In turn, he showed a resolute faith that those participating in financial markets would act responsibly, imbuing them with a kind of nobility.

While his ideas and the notion of the trickle-down effect failed to spread wealth equitably, the underpinning philosophy was redistributed more successfully. The age of the super rich has devalued many activities whose aims were not solely to make money. Doctors, academics, architects and teachers found themselves in regular states of inadequacy as the new financial class outbid them for houses, schools, space and possessions.

This insecurity occurred while the new masters were proclaiming us all to be much wealthier, perhaps the industry's greatest confidence trick.

Meanwhile, the brightest in science and mathematics soon realised using their skills to engineer derivatives was far more profitable than the actual profession of engineering. Attempting to cure cancer was a painful chore compared with fashioning credit default swaps.

The result is outlined in Warren Buffet's 2005 annual sermon, where his deputy, Charles Munger, said that never before "have so many in the intelligentsia been engaged in buying and selling pieces of paper".

It remains to be seen whether recent events will change these trends. At a careers night I attended earlier this year, almost two-thirds of the year 12 students wanted to work in the financial markets. The combination of technology and deregulation has favoured the industry disproportionately. Unlike previous booms, the financial services boom may leave us with little infrastructure of value. Perhaps its demise is linked to the ludicrous system of rewarding those activities of dubious value, at the expense of things which actually are useful.

Money will remain at the centre of human affairs, weaving its way into matters of love, death and social connectedness. But the return of a sense of scepticism about the innate moral worth of money may be the most valuable outcome of recent events.

Tanveer Ahmed is a psychiatry registrar.