daytrading may 8 morning, page-58

Yeh, agree its not just coal but majority of electricity production is coal. Point is, they don't have much choice but to do something about pollution. If the same situation was occurring in Australia or the USA, sirens would be blaring in the streets.

Coal is hanging in cos atm there is no obvious alternative. But something has to give. imo

Hmmm, still nothing happening on market.

Here's another thought courtesy of Clime Group.

Last week the Federal Government released the Commission of Audit’s report which included sweeping recommendations to cut spending. The Abbott Government has also flagged a ‘deficit tax’. Both will have a serious impact on the economy, companies and investors.

But few are asking the obvious questions: is Australia really facing a budget crisis? Will new taxes actually cut government debt? And why is the Government ignoring a simple, obvious tax that could help solve its ‘budget crisis’?

Why the fuss about our debt?

If you observe the chart below (Figure 1), which looks at the major developed economies, it clearly suggests our current debt position is not a problem.

At the end of 2013, the average net debt of the advanced economies (excluding China) was 78.7%. But Australia’s net debt was just 14.5%, or about $230 billion. Our gross debt was a bit higher at around $300 billion and this is the number that the Treasurer consistently focuses on when he projects the future.

Given the above, it is difficult to understand what the fuss is about and why the Government is actively suggesting that new taxes or levies have to be found and expenditure slowed.

Indeed, based on the Government’s projection that gross debt may reach $600 billion before the budget stabilizes towards the middle of the next decade, the forecast is that net debt will reach just 25% of GDP.

A glance at the above chart shows Greece has the highest net government debt in the world today. It is remarkable therefore that they have re-emerged into the European bond market. Greece shows that even massive debt will not impact access to further debt, if there is a sensible and supportive monetary policy regime.

Even Portugal, which has 115% net debt to GDP (number 3 on the net debt list) was able to climb back onto the bond raising bus the week before last; Portugal was so successful that it was able to raise 10 year bonds at a lower interest rate (3.6%) than Australia can at present (4.0%).

Think about that carefully. A country with junk bond status can raise long term debt cheaper than Australia with our AAA rated bonds. Something is clearly not working here in Australia.