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Wednesday, 03 October 2012 02:22

To My Dear Dead Husband Tom........

To My Dead Husband Tom,

Why were you so against insurance? You always chuckled and laughed that you would never die and I would just remarry. Well guess what? You died one year later! It’s now two years later, all our money is gone and I have some real physical and mental challenges.

I am left with our daughter Susan, NO HOME, working two jobs, and bills coming from everywhere.  The doctor bills for your heart attack alone were in excess of $90,000.

The fun and laughter is now gone and we are really hurting! When I really think about it, I believe I am as much to blame as you are. I should have opened my mind and imagined the alternative picture that my Financial Planner was painting. Instead I chose to laugh about it and assumed it would never happen to us.

The joke is on me! I am not remarried and most likely will not get married ever again. When someone dies it is amazing the sorrow and pain that comes to the surface.

I want to let you know that I now have a policy on myself, and I make sure it is the first bill paid. If something ever happens to me, I want Susan to be protected. You know what kills me the most? For approximately  $650 a year, we could have been protected.

Tina

Wednesday, 19 September 2012 03:01

Positive Developments In The Euro Debt Crisis

There have been some very positive developments with respect to the Euro Debt Crisis over the past few months that many would argue is potentially the turning point of the crisis.

View 3 1/2 minute video by Mark Draper explaining some positive developments in Europe

Brandenburg Gate Berlin

In summary these developments are:

  1. The European Stability Mechanism, which has funds of EUR 500bn, will be available for operation in the second half of 2012.  This fund was the subject of a legal challenge to the German High court on constitutional grounds and this challenge was dismissed yesterday.  The purpose of this fund is for recapitalising European Banks as well as funds to purchase Government Bonds in countries such as Italy and Spain in order to keep borrowing rates affordable for those countries.
  1. The European Central Bank (ECB) has announced a program that will allow the ECB to purchase an unlimited amount of Government Bonds in the market for countries that seek assistance and accept strict conditions about aspects of their budgets.  The purpose of this is to guarantee access to funding for European Governments at affordable rates.  We have long argued that Spain and Italy are solvent countries, providing their borrowing costs do not become excessive.  This announcement is critical in keeping interest rates low and has seen borrowing costs for Italy and Spain come down significantly as can be seen below:
Spanish 3 Year Govt Bond Rate Spanish 10 Year Govt Bond Rate Italian 5 year Govt Bond Rate Italian 10 year Govt Bond Rate
Borrowing rate as at November 2011

6.25%

7.6%

(as of July 2012)

7.5%

7.2%

Borrowing rate now

4.4%

5.6%

3.7%

4.95%

  1. We continue to believe that there is very little risk of a financial meltdown resulting from the Euro Debt Crisis or Financial Armageddon.

The Head of the European Central Bank recently went on record as saying “We will do whatever it takes to keep the Euro together, and believe me this will be enough”.  He has backed up this rhetoric with the announcement to purchase an unlimited amount of European Government bonds for countries that request assistance.

Does this mean that this is the end of the crisis?  Unfortunately not, however, we see these developments as very important building blocks that should stabilise the Eurozone and allow the Governments to carry out the necessary reforms to put their economies on a sustainable path.  These reforms include tax, welfare, spending and labour market reforms.

In addition to these the other steps that the leadership of the European Union will need to take is to formulate plans for a Banking Union, and a closer Political union, which would result in individual countries surrendering some degree of control over their budgets in exchange for access to funding at cheaper rates and other economic benefits.

Currently the European Union is a currency union, arguably put together for political reasons, now they must bring together other aspects of their economies.  This is not something that can be done quickly given the political pressures.  The ECB however appear to have provided the necessary time for the politicians to get on with the job as the ECB alone can not resolve this crisis.  This is where we see the main risk – with politicians and potential for the balance of power to shift over time.

The other main source of risk would seem to be with the very high levels of unemployment in countries such as Spain where overall unemployment is around 25% and youth unemployment is around 50%.  This has potential to create social unrest which is difficult to predict.

Overall, we believe that the most recent steps are very positive moves forward that can provide the building blocks for the Euro Debt Crisis to be brought under control and financial markets have welcomed these moves in the form of lower borrowing costs for Italy and Spain.

There is an excellent video we produced earlier this year called “Fire Wall for the European Debt Crisis” that discusses the firewalls that have been created to ensure European Governments continue to have access to funding at affordable rates.  This can be found by clicking the YouTube icon on our website at http://www.gemcapital.com.au and is well worth viewing.  It runs for 6 minutes.

We trust you find this update useful and helps you put into context some of the information you are hearing in the media.

 

This material has been provided for general information purposes and must not be construed as investment advice. This material has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Investors should consider obtaining professional investment advice tailored to their specific circumstances prior to making any investment decisions and should read the relevant Product Disclosure Statement.

The miners are big enough to play dirty

Key points

  • The mining investment boom still has another year or two to go but its peak is starting to come into sight and the best has probably been seen in terms of commodity prices.
  • While there is the risk of a timing mismatch around the end of the investment boom in 2014 and as other sectors take over in driving Australian economic growth, the eventual end of the mining investment boom should lead to more balanced Australian growth.
  • The eventual slowing of the mining boom should mean lower interest and term deposit rates, the best is over for the Australian dollar (A$) and a more balanced share market.

Introduction

Recent weeks has seen much debate and consternation in Australia as to whether the mining boom that has supposedly propelled the economy for the last decade is over. This followed the cancellation or delay of various resource investment projects including the massive Olympic Dam expansion and a fall in commodity prices over the last year.
But is it really over? And would it really be the disaster for Australia that many fear? After all, we have had years of hearing about the two-speed economy where the less resource-rich south eastern states were being left behind and it was said that the people of western Sydney were paying the price (via higher-than-otherwise interest rates and job losses) for the boom in Western Australia, so many Australians might be forgiven for thinking good riddance.

Semantics and confusion

Much of the debate about whether the mining boom is over has been characterised by confusion as to what is being referred to with some focusing on commodity prices, others on mining investment projects and others saying that technically it hasn’t even begun until mining and energy exports pick up. In broad terms the mining boom that has gripped Australia for the last decade likely has three stages.

The first stage, or Mining Boom I (MB I), began last decade and saw surging resource commodity prices driven by industrialisation in China. This resulted in a rise in Australia’s terms of trade to near record levels (see the next chart). This phase was initially good for
Australia last decade as it seemingly benefited everyone. Resource companies got paid more for what they produced, their profits surged, they employed more people, and they paid more taxes, which led to budget surpluses and allowed annual tax cuts. They paid more dividends and their share prices went up. The A$ rose but not to levels that caused huge problems for the rest of the economy. So, not only did the resources companies benefit but there was a big trickle down effect to almost everyone else. As a result the economy performed very strongly and unemployment fell below 4%.

 

The second stage, or Mining Boom II (MB II), has been characterised by a surge in mining and energy investment. This has been underway for the last few years and will take mining investment from around 4% of gross domestic product (GDP) in 2010 up to around 9% in 2013, contributing around 2 percentage points to GDP growth in each of 2011-12 and 2012-13.

 

The third stage, or Mining Boom III (MB III), will presumably come when resource exports surge on the back of all the investment.  So where are we now? In terms of the commodity price surge that characterised MB I, it’s likely that we have either seen the peak or the best is over with more constrained gains ahead:

  • Firstly, the pattern for raw material prices over the past century or so has seen roughly a 10-year secular or long-term upswing followed by a 10- to 20-year secular bear market, which can sometimes just be a move to the side.

 

The upswing is normally driven by a surge in global demand for commodities after a period of mining underinvestment. The downswings come when the pace of demand slows but the supply of commodities picks up in lagged response to the price upswing. After a 12-year bull run since 2000 this pattern would suggest that the commodity price boom may be at or near its end.

  • Global growth appears to have entered a constrained patch. Excessive debt levels in the US, Europe and Japan have constrained growth, while potential growth in China, India and Brazil looks like being 1 or 2 percentage points lower than was the case before the global financial crisis. This means slower growth in commodity demand going forward.
  • The supply of raw materials is likely to surge in the decade ahead in response to increased investment.
  • Finally, the surge in commodity prices since 2000 was given a lift by a downtrend in the US dollar from 2002 as commodity prices are mostly priced in US dollars. This has now likely largely run its course.

Taken together, this would suggest that the best of the commodity price surge since 2000, or MB I, is behind us. There are two qualifi cations though. First, after the recent short-term cyclical slump there will still be a rebound, probably into next year as global growth picks up a bit. Second, it’s way too premature to say that the surge in demand in the emerging world is over - China and India are still very poor countries with per capita income of just US$8,400 and US$3,700 respectively compared to US$40,000 in Australia suggesting plenty of catch-up potential ahead and related commodity demand.

In terms of MB II, while the cancellation of Olympic Dam and other marginal projects indicates that projects under consideration have peaked, this does not mean the mining investment boom is over. In fact it probably has another one to two years to run. Based on active projects yet to be completed there is a pipeline of around A$270 billion of work yet to be completed. Iron ore related capital spending (on mines and infrastructure) are likely to peak this fi nancial year and coal and liquid natural gas related investment is likely to peak in 2014-15, suggesting a peak in aggregate around 2014.

In other words, the boom in mining investment has 18 months or so to run before it peaks and starts to subside back to more normal levels. But what can be said though, is with the cancellation of marginal projects that were in the preliminary stage, the end is coming into sight.

Finally, MB III or the pick-up in export volumes flowing from the surge in mining investment in iron ore, coal and liquefied natural gas will start to get underway around 2014-15.

Heading towards a more balanced economy

Talk of the end of the mining boom has created a bit of nervousness regarding the outlook for Australia. However, the reality is that the current stage of the mining boom focused on
mining investment has not been unambiguously good for the economy and its inevitable end should hopefully see Australia return to a more balanced economy.

It was always thought that after two or three years the surge in mining investment would settle back down as projects ran their course. Trying to do a whole lot of projects in a relatively short space of time was always fraught with the threat of excessive cost
pressures and an excessive surge in supply. We are now seeing market forces kicking in to rationalise resource projects and so the more marginal projects are being delayed. This is a good thing as it will reduce cost pressures, leave work for the future and reduce the
size of the commodity supply surge over the decade ahead thereby helping avoid a crash in commodity prices.

The cooling down of the mining investment boom should help lead to a more balanced economy. MB II has not been good for big parts of Australia. With roughly 2 percentage points of growth coming from mining investment alone it has really put a squeeze on the
rest of the economy. Housing and non-residential construction, retailing, manufacturing and tourism have all suffered under the weight of higher-than-otherwise interest rates and a surge in the A$ to 30-year highs.

What’s more the boom in mining investment has meant that the Federal Government has not seen the tax revenue surge it got last decade, so last decade’s regular tax cuts have not been possible and this has weighed on household income.
This is all evident in the Australian share market which has underperformed global shares since late 2009, with the resource sector being the worst performer over the last year as resource sector profits have fallen 15% or so.

So, the end of the mining investment boom, to the extent that it takes pressure off interest rates and the A$, should enable the parts of the economy that have been under the screw for the last few years to rebound, leading to more balanced growth. This is also likely to be augmented by a pick-up in resource export volumes equal to around 1% of GDP from around 2014-15 according to the Bureau of Resource and Energy Economics.

Of course a risk is of a timing mismatch around 2014 as investment slows down with other sectors taking a while to pick up. To guard against this the Reserve Bank will clearly need to stand ready to respond with lower interest rates.

The bottom line is that the end of the mining investment boom in a year or two won’t necessarily be bad for the Australian economy and will likely see a return to more balanced growth.

Concluding comments
It’s premature to call the end of the mining boom just yet. The peak in mining investment probably won’t be seen until 2014 and thereafter actual mining production and hence exports will start to pick up. However, the best has probably been seen in terms of commodity price gains and the end of the investment boom is starting to come into sight.
While there may be the risk of slower growth as the Australian economy shifts gears away from mining investment in 2014 to mining exports, construction and other parts of the economy that have been subdued, the end of the investment boom should lead to a more balanced economy reflecting less pressure on the interest rates and the A$.
For investors there are several implications including:

  • Ongoing pressure for lower interest rates as the risk of an overheating economy subsides. This means that term deposit rates are likely to fall further in the years ahead.
  • The best has likely been seen for the A$, implying less need to hedge global shares back to Australian dollars.
  • Resources shares are currently cheap and should experience a cyclical rebound when confidence in global growth improves.
  • However, beyond a short-term bounce it’s likely that the cooling of the mining boom will allow a return to a more balanced share market with domestic cyclicals likely to perform better.

This material has been provided for general information purposes and must not be construed as investment advice. This material has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Investors should consider obtaining professional investment advice tailored to their specific circumstances prior to making any investment decisions and should read the relevant Product Disclosure Statement.

Monday, 03 September 2012 02:46

New Warning - Serious Investment Fraud

Fraud

The Minister for Home Affairs and Minister of Justice Jason Clare today urged Australians to protect themselves against the growing threat of serious and organised investment fraud.

Minister Clare released a new report from the Australian Crime Commission (ACC) and Australian Institute of Criminology (AIC) which provides a national picture of the nature and threat of serious and organised investment fraud in Australia.

“This is the first unclassified report of its kind. It indicates that more than 2600 Australians may have lost more than $113 million to serious and organised investment fraud in the last five years. That number could be even higher because people tend not to report this kind of crime,” Mr Clare said.

“The targets of this type of crime are primarily Australian men, aged over fifty. They are usually highly educated – and have high levels of financial literacy. They are likely to manage their own super.

“This is what happens. The criminal syndicate cold calls the investor, refers them to a flash website and sends them a brochure promising strong investment returns. After taking their money they string them along for months or even years and then the money disappears.

“People’s entire life savings are stolen by criminals with the click of a mouse. This type of crime destroys wealth and destroys lives. It’s also very difficult to stop.

“These criminal syndicates usually operate from outside Australia. They use front companies and false names. Once they’ve stolen the money the website disappears and the trail goes dead.”

In the next two months every household in Australia will receive a letter warning them about this criminal activity and providing information on how to avoid becoming a victim.

This is the first time Australian law enforcement agencies have undertaken a mail out of this scale regarding serious and organised crime.

“This problem is not going away. Australia’s retirement savings are growing – making us a bigger target every year,” Mr Clare said.

ACC Chief Executive Officer Mr John Lawler said the level of superannuation and retirement savings in Australia made it an attractive target for organised crime groups.

“To combat this growing threat, last year the ACC Board established multi-agency Task Force Galilee to disrupt and prevent serious and organised investment fraud and harden Australians against this type of organised crime,” Mr Lawler said.

“These scams are typically unsolicited ‘cold calls’ used alongside sophisticated hoax websites to try and legitimise the fraud. This type of crime targets the life savings of hard working Australians. Australian and international law enforcement partners stand committed to protecting Australians from these crimes.”

Australian Securities and Investments Commission Chairman, Greg Medcraft said fraudulent investments are incredibly sophisticated and very difficult for even experienced investors to identify.

“Perpetrators of this type of fraud are skilled at using high-pressure sales tactics, over the phone and using email, to persuade their victims to part with their money,” Mr Medcraft said.

“I urge investors to be immediately wary if they are called at random by someone offering an investment opportunity overseas.”

Australians should take the following actions to prevent becoming victims of investment fraud:

  • Visit www.moneysmart.gov.au or call 1300 300 630 for further information or advice.
  • Alert your family and friends to this fraud, especially anyone who may have savings to invest.
  • Report suspected fraud to the Australian Securities and Investments Commission, on www.moneysmart.gov.au or 1300 300 630, or your local police. Remembering information such as company name, location and contact details will assist with subsequent investigations and enquiries.
  • Hang up on unsolicited telephone calls offering overseas investments.
  • Check any company you are discussing investments with has a valid Australian Financial Services Licence at www.moneysmart.gov.au
  • Always seek independent financial advice before making an investment.

To access the report on Serious and Organised Investment Fraud in Australia see the ACC website www.crimecommission.gov.auor visit www.moneysmart.gov.au or call 1300 300 630 for further information and to report suspected investment fraud.

Warning letter that was sent to all Australian households

Media contact:  Annie Williams - 02 6277 7290

Monday, 27 August 2012 07:02

Reversionary Beneficiary

Allocated Pensions - Reversionary Pension could save Tax for surviving spouse

retirement-planning

Many people are under the impression that their will deals with all of their assets after death.  Not so generally with respect to people’s superannuation.

The payment of the balance of your superannuation fund, after your death, will generally be to a dependant beneficiary, such as your spouse or a dependant child.  However if no nomination has been made, the decision about where to pay benefits could rest with the trustee of the super fund.  It may be beneficial to pay your superannuation benefit as a pension rather than a lump sum.  To facilitate this your fund may allow you to nominate what is known as a “reversionary beneficiary”. The nomination of a reversionary beneficiary allows for the continuation of your pension upon your death, locking in some important potential benefits.

The rules of the fund (trust deed for Self Managed Super Funds must allow you to nominate a reversionary at the time you begin the original allocated pension, this is an important aspect for trustees of Self Managed Super Funds to check.

Some advantages of nominating a reversionary beneficiary.

Continuity of Tax Treatment - If the primary beneficiary was 60 or older at the time of death, then payments to the reversionary beneficiary will be tax exempt regardless of the age of the beneficiary. This is also the case if the reversionary beneficiary is also 60 or older but the member died before reaching 60.

John is 62 years old and has commenced an allocated pension with his wife Mary aged 57 as his reversionary beneficiary. If John dies Mary would continue to receive his pension payment of $30,000 per year tax free even though she is only 57 years old.

This benefit can be particularly important if Mary has another source of taxable income in her own right where she has already used up her tax free and low tax threshold.

Your benefit is paid according to your wishes. Where a valid reversionary nomination is made, the trustee of the superannuation fund is bound to continue paying the pension to your nominated reversionary upon your death. This takes away the risk that the superannuation fund trustee may pay part or all of your benefit to someone other than whom you desired.

This risk can arise when people have multiple spouses (although not at the same time) and children from different relationships.  Sometimes in these situations having assets bypass the estate can reduce the risk of an estate being contested resulting in hefty legal bills.

There can clearly be benefits in establishing a “Reversionary Beneficiary” for investors with allocated pensions, however these nominations can only be made at the time of establishment. For those with pre-existing allocated pensions, they could simply rollover their fund to a new fund provider and nominate a reversionary beneficiary at that time, but this needs to be considered against any adverse effects on Centrelink entitlements.

 

Monday, 27 August 2012 01:14

Financial Planning and Family Risk

There is an important aspect to Financial Planning we would like to highlight which is the potential risk associated with an illness, injury, or major trauma event occurring to a member in your family ie a son, daughter, their spouse or a grandchild.

If the unthinkable happened and one of your family members was to suffer from any of these events, would they survive financially, or would you need to step in and offer financial support?
We think it is important that you be honest and ask yourself two questions.
  1. Would you step in and help out your family in the event that one of your children, their spouses or your grandchildren were to suffer a serious illness or injury.  We know the importance of family and think in most cases the answer would be yes.
  2. How would you feel if when you found out they had no or insufficient insurance cover to provide for their family.......how would the rest of your family feel?

The financial consequences for you could be a burden too great to bear and drastically affect your future plans and other family members.

Many parents know little or nothing of their extended family’s real financial position, this extends to not knowing how much debt they hold and ongoing financial commitments they have.  In addition, most parents rarely know what insurance cover they have in place and if this is sufficient to meet the circumstance.

This is not unusual as they are adults now and responsible for their own life BUT, if something did happen and only then did you find out, you would potential have to suffer the financial consequences.  This is what we call Family Risk as it affects all members of the family.

We provide a financial planning service to the adult children of our clients.  We would be happy to have a discussion with you about your family and how we could provide this service to them.

Wednesday, 22 August 2012 01:44

Spain & Italy Are (Probably) Fine

...right round, baby, right round. Let's get it together and have a roundtable...Just as Brussels is finally enjoying a spell of summer sun, there’s more good news for debt-crisis watchers who stayed behind in the European Union’s headquarters: The Peterson Institute for International Economics says the debt loads of Italy and Spain are (most likely) sustainable.

In a new working paper, William R. Cline—a sovereign-debt crisis veteran going back all the way to Latin America’s troubles in the 1980s–calculates different trajectories for the debt loads of the two countries whose financial fate is seen as central to the survival of the euro. The interesting thing about the paper is that it not only examines three typical scenarios (good, baseline, bad) and applies them to five variables (the level of growth, primary surplus, interest rates, bank recapitalizations, and privatization receipts), but also assesses the probability of several of these variables going bad (or good) at the same time. In other words, Mr. Cline calibrated the effect of, say, low privatization receipts on a government’s primary surplus or the interest rates it’s likely to pay on its bonds.

His conclusion–which should delight policymakers in Rome, Madrid, and Brussels alike–is that the most likely outcome by the end of the decade is that “both Spain and Italy remain solvent” and that they won’t need a debt restructuring á la Greece or, even worse, leave the euro zone.

The “probability weighted average,” i.e. the best bet, for Spain is that its debt will be no higher than 92% of gross domestic product by 2020. That’s up quite a bit from the 81% it is expected to hit by the end of the year and slightly worse than the 89% under Mr. Cline’s baseline scenario, but still at a level that is generally seen as manageable for a large, developed economy. On top of that, there’s a 75% chance that the debt load will be below 99% of GDP by 2020. For Italy, the best bet is a debt that declines to at least 109% of GDP by 2020 from 123% this year, with a 75% probability that it will go down to at least 116%.

Now, forecasting debt levels eight years into the future is in itself a tricky exercise. The goal of Greece’s debt restructuring earlier this year was to bring the country’s debt load to a “sustainable” 120% of GDP by 2020. Even back in March some EU officials warned privately that that kind of calculation was more of a political spiel designed to convince parliaments in countries like Germany or the Netherlands to once again open their wallets for Greece than a sound basis for economic policy making. Less than six months on they were proven right–international debt inspectors are currently trying to determine how much the political uncertainty of two national elections have set the country behind in hitting the 120% target, while the International Monetary Fund is arguing that for Greece, really, a level of 100% of GDP is much more suitable.

The biggest challenge with these calculations is of course determining how to fill in the variables, i.e. what’s the good, baseline or bad scenario for growth or interest rates. And it is perhaps here were Mr. Cline’s analysis is most vulnerable. For Spain, for instance, the “good” scenario for bank recapitalizations is that Madrid will have to pick up exactly €0 of the cost of recapitalizing its banks—that would only happen if either the stakes the government acquires in struggling lenders turn out to be unexpectedly valuable or the country succeeds in moving the entire recapitalization costs off its own books and onto those of the euro-zone bailout fund. We explained why either of these two scenarios are unlikely here and here.

The baseline scenario expects bank recapitalizations to add only some €5 billion to government debt (mostly thanks to the European Stability Mechanism taking direct stakes in the saved lenders rather than routing the money through the government, as Mr. Cline explained in an interview). Even under the bad scenario the bank bailouts add “only” €50 billion to the debt load (that’s assuming that the cost cannot be transferred to the ESM). Considering that the euro zone has promised Spain as much as €100 billion and some analysts fear that low growth could push the bailout bill even beyond that, it’s easy to imagine a worse scenario. (Sidenote: the bank recapitalization section in the Spain scenario table on p.15 of the paper also includes €36 billion in debts that the Spanish government may have to take on from crisis-hit regions—a footnote that Mr. Cline says was accidentally dropped in the final version.)

But there are conclusions in the paper that go beyond the exact variables used for the different scenarios. For instance, Mr. Cline’s calculations show that for both Spain and Italy higher interest rates—and even lower growth–have a smaller effect on debt levels than missing budget targets. For Spain, more-expensive bank bailouts set off a similar dynamic: the “bad”(€50 billion) recapitalization scenario drives the baseline debt load from 89% of GDP to 94% by 2020; the full €100 billion, meanwhile, would take it up to 99%, even if all other variables stay in the baseline.

The good news from that if of course that governments may have more influence on their primary deficits—and even the cost of bank bailouts for national governments amid “direct” bank recapitalizations from the ESM–than on interest rates and growth. Or as Mr. Cline summed it up in an email: “The good outcome depends on Spain doing its part on the primary surplus and the euro zone doing its part on the banking union.”

If that thesis holds up, Mr. Cline’s analysis may herald more good news than Brussels weather, where the probability of sustainable summer sunshine is close to zero.

By Gabriele Steinhauser

The Wall Street Journal

Monday, 13 August 2012 06:29

House Hold "Tips and Tricks"

Useful Tips and Tricks For Every House Hold

cutaway house

  • To silence your squeaky hardwood floors sprinkle some baby powder on the squeaky area and sweep it into the cracks. Then wipe the floor. The baby powder between the boards will act as a lubricant and will stop the annoying noise.
  • Have friends on their way over and you forgot to put drinks in the fridge. Place your drinks in a large pot and cover with ice. Sprinkle 2 cups of salt on top of the ice and then fill the rest of the pot with water. Your drinks will be ice cold within 2 to 3 minutes.
  • If you have already sealed an envelope and realized you forgot to put something in it, place the envelope in the freezer for a couple hours. It will pop right open so you don't have to get another envelope.
  • After cooking fish put a little vinegar in a pot and let it boil. The nasty fish smell will disappear almost instantly leaving your kitchen smelling clean again.
  • To peel a kiwi cut off the top and bottom, slip a spoon between the skin and the flesh. Twist the spoon around the entire kiwi (keeping it between the skin and flesh the whole time). Then just pop the skin off.
  • When you are done using the roll of tape, fold the last quarter inch down and stick it back onto itself. This will create a little tab that can easily be found so you don't have to waste time searching for the end of the tape.
  • Accidentally close a tab on your browser? No problem! Hit ctrl-shift-T and the page will pop up again.
  • When packing liquids (shampoo, conditioner, mouthwash, etc...) for your next trip, take the lid off, place a piece of plastic wrap over the opening and screw the lid back on. The plastic wrap will keep the liquid from spilling even if the lid pops open.
  • Before cooking a burger patty, press a hole in the middle of the patty. The hole will disappear as the burger cooks. This will minimize shrinking and you won't have to worry about them not being done in the center.
  • Rubbing some butter over the cut edge of a block of cheese will seal it and stop it from molding.
  • When masking tape and painters tape sit in the garage or other hot areas for too long, they tend to dry out and break apart when you try to peel them. Place them in the microwave for a few seconds. (keep a close eye on them, you don't want to start a fire.) This should loosen them up and they will peel a lot easier.

1)  Check to see if you can get a better contract, or make payments based on average monthly cost.

Check to see if you can get a better contract, or make payments based on average monthly cost.

  • Determine how much electricity you use. Use the monthly electric bills from the last year to calculate an approximate value.
  • (If possible) Compare different offers from electrical companies; chose the one that is the cheapest (lowest cost per kilowatt hour).
  • Find out if there is an OFF-PEAK time of the day when the rate is lower and use that time for most electricity needs (e.g. running washing machine, dish washer, or cooking). This will likely require additional costs for special metering hardware to track usage during those times.

2)  Buy energy efficient devices.

  • Don't buy devices that are bigger than necessary (buy and use small pressure cookers whenever possible). Ask for energy efficient devices. Don't forget to check the stand-by consumption. Check if there is a label like Energy Star.

3)  Switch off or unplug devices when not in use

Switch off or unplug devices when not in use.

  • If a device doesn't have an on/off switch, use a plug connector with an on/off switch. Connect for example your TV and the loudspeakers with a plug connector. You can switch off both devices by just one action. Connect your DVD recorder with a separate socket since it is likely that you have to readjust it if you would switch it off.
  • Don't forget that power adapters (transformers for rechargeable appliances) also consume energy. Unplug them when not in use.
4)  Be aware of the energy consumers in the household
     Refrigerator, Freezer and Fridge:
  1. Put each cooling device on a place which is as cold as possible, away from heat sources like radiators, direct sunlight or other big energy consuming devices.
  2. Check that the cooling device is at least 5cm (2 inches) away from the wall and that the air can circulate well.
  3. Increase the inner temperature of the cooling devices. 7°C (45°F) are enough for the fridge and -18°C (0°F) are enough for the freezer.
  4. Keep the cooling devices tidy, label the items in the freezer, so that you can get the food item as quick as possible.
  5. Fill unused space with padding such as polystyrene or just a blanket.
  6. Keep the door of these devices closed.
  7. Check the sealing gasket of the cooling devices: Put a switched on torch (lamp) in the fridge and close the door. Check if the sealing gasket is damaged and buy a new one if necessary.
  8. Act energy efficient. Let the food cool down before you put them in a cooling device and warm up frozen food in the fridge.
  9. Defrost the freezer if there's a layer of ice.

Lights:

  1. Find effective places for lights and light switches.
  2. Paint your rooms in a bright color. More light is reflected by those brighter walls and so you need less light to make your room bright.
  3. Replace regular light bulbs with compact fluorescent bulbs. It is economical to replace a light bulb if it burns for more than half an hour a day. Use high quality L.E.D. - Light Emitting Diode (Best type) or C.F.L - compact fluorescent bulbs.
  4. Don't use ceiling floodlights, unless there L.E.D. types.

Stove:

  1. Use the right pots. Use pots with a diameter that is as small as possible. Put these pots only on hobs that fit to them or are smaller. Try to use a pressure cooker if you're cooking for a considerable time. Check that the bottom of the pot is even. Keep the pots closed as long as possible. Without a lid you'll loose about 2/3 of the energy.
  2. Reduce the amount of water you use while cooking.
  3. Turn the stove off 5 minutes before you reach the cooking time.
  4. Chose a gas stove or an induction cooker if you buy a new stove.
  5. Boil water with an electric kettle instead of the stove.

Oven:

  1. Don't preheat the oven.
  2. Bake with circulating air.
  3. Use the oven several times if it's already hot.
  4. Keep the oven's door closed as long as possible.
  5. If the oven has already reached the final temperature turn it off 10 minutes before the food is ready.
  6. Use a toaster or the microwave if possible instead of the oven.

Dishwasher and washing machine:

  1. Check if these devices are connected with the hot water pipe.
  2. Make the devices as full as possible.
  3. Reduce the water temperature and use energy and/or water saving modes.

Avoid the air conditioner. (You need 3 times more energy per degree to cool a room than to heat a room).

  1. Ventilate during the night or early in the morning in order to store the coolness for the day.
  2. Keep the coolness in the house during the day. Close the shutters and keep your windows and doors closed.
  3. Use a fan instead of an air conditioner.

Avoid heating with electric energy.

  1. While electric heat is the most efficient, it is often the most costly. If you can't change this or you use another energy source (natural gas, propane or heating oil) you can save money on electricity if you lower your heating costs.

Avoid the clothes dryer.

  1. Dry your wet clothes on a laundry line. If you can't follow this step try to fill the drier as full as possible and use the mode "iron-dry".

Optimize the energy consumption of your PC

  1. Modern PCs can be set up to enter energy saving modes from both the BIOS settings page and directly from the Windows Operating system. Enable "Sleep" and "Hybrid Sleep" for desktops and "Hibernation" for notebook PCs running Windows.

 

Monday, 23 July 2012 01:30

Greek Economy

Greek Village

It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted.    Times are tough, everybody is in debt, and everybody lives on credit.

On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a $100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night.

The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the $100 note and runs next door to pay his debt to the butcher.

The butcher takes the $100 note and runs down the street to repay his debt to the pig farmer.   The pig farmer takes the $100 note and heads off to pay his bill at the supplier of feed and fuel.   The guy at the Farmers' Co-op takes the $100 note and runs to pay his drinks bill at the taverna.   The publican slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has had to offer him "services" on credit.    The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the $100 note.

The hotel proprietor then places the $100 note back on the counter so the rich traveller will not suspect anything.   At that moment the traveller comes down the stairs, picks up the $100 note, states that the rooms are not satisfactory, pockets the money, and leaves town.

No one produced anything.

No one earned anything.

However, the whole village is now out of debt and looking to the future with a lot more optimism.

And that, Ladies and Gentlemen, is how the Greek Economy works.

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