Sunday, 29 March 2015

Americans buy FEA

FEA’s Receivers Deloitte has at last found a buyer for FEA’s land and trees.

Resources Management Services LLC (RMS) a forestry investment manager from Alabama paid $125.5 million for land belonging to FEA and trees belonging to FEA’s MIS growers.

The sale price confirms that forest assets have continued to plummet in value. The sale price is a disaster for everyone waiting for a distribution, the secured and unsecured creditors and the growers.

The insolvency practitioners stand the best chance of getting paid in full.

Sunday, 8 March 2015

Intergenerational nonsense

The fear of burdening our grandchildren with debt, we are forever being told, is the reason why there is a need to return to a budget surplus.

Few argue with the proposition, most only quibble about the speed to reach a surplus.

But not since the days of the flat earthers have so many unquestionably swallowed such nonsense.

Clearly if the Jones borrow long term from the Smiths, the younger members of the latter family may suffer a reduced standard of living by having to repay the debt, compared to the older members who received the benefits of the loan.

That certainly applies where the older members simply consumed the benefits.

It is less obvious when the benefits are of an enduring nature. Borrowing to build the Sydney Harbour Bridge would have few detractors on this score, especially given hindsight.

To extrapolate a family situation to the whole economy is however, complete nonsense, another example of the fallacy of composition, not unfamiliar in economics.

Friday, 6 March 2015

Things that can't last......

Things that can’t last forever usually don’t.

This morning’s Examiner reported on a leaked email from Forestry Tasmania (FT) Chairman to FT staff responding “to mounting concerns that the cash-strapped company may be dissolved and folded into a government department.”

In that event a radical transformation will occur.