This isn't Neverland
Page 1 of 4
Martin Conlon is head of Australian equities with Schroders.
Philosopher Ayn Rand would be rolling in her grave given current global events.
The past quarter has seen only a painful continuation of European crisis meetings with no useful outcome, more mediocre economic data and lots more whingeing.
Suggestions that capitalism should be allowed to function as it was intended remain totally absent. Those likely to benefit from German benevolence remain vociferous in encouraging it, while those benefiting from artificially low interest rates and government handouts remain firmly supportive of their continuation.
Those providing the resources through paying taxes, earning profits and efficiently producing goods and services are either ignored or vilified. After all, why work when someone else can do it for you. Why resort to free market competition when you can lobby for assistance?
Unfortunately, decades of slowly increasing government intervention and Keynesian policies, which allow government control of money and credit, will not be permitted to recede easily. We must therefore ponder the potential actions of policymakers and the response these actions are likely to elicit from those impacted, as it is certain they will dominate the landscape for years to come.
Many would argue that much of this can be ignored and we should focus solely on bottom-up stock picking. We could think of nothing better. However, this isn't Neverland and I'm not Peter Pan.
Almost every industry and business we can think of is impacted by intervention to varying degrees, either here or offshore. Industries such as steel and aluminium are suffering from Chinese policies, which encourage new capacity to be built until profits disappear totally.
They are proving successful in this profit elimination. Banking thrives on volume growth dictated by the extent to which central banks make credit available. Airlines are subsidised and manipulated the world over in the name of tourism.
Regulators set prices for utilities and telecommunications companies while governments allow toll roads to shut and prevent alternate routes to allow high tolls and upfront payments to governments. Land prices are influenced by government regulation on land release and house prices are distorted by credit availability and negative gearing policies.
We've got carbon tax policies making us uncompetitive versus countries without them and handouts back to those impacted by them. All sounds pretty free market to me.