Someone’s upset, again. Foxtel chief executive Kim Williams on the rebates to the FTA TV networks February 8. “This appears as just another handout on top of the protections the free-to-air networks already enjoy. In an act of breathtaking indifference to the announcement, major metropolitan networks are now briefing analysts in the investment community that the full tax handout will drop directly to their bottom line with no deductions, despite the government saying the tax break is needed to protect local Australian production.”

February 10. “If the networks are to be favoured with such ever-increasing government largesse, at the very minimum there must be some levelling of the policy playing field through a reduction in the … anti-siphoning list” to those events the commercial networks actually broadcast. But how much does Foxtel pay the federal Government in licence fees? Nothing. And because Telstra owned 50% (and still does) when Foxtel started, (and even though the federal Government controlled Telstra), Foxtel has paid Telstra nothing in carriage fees for using the HFC cable.

No space at MySpace, again. Memo, News Corp executives around the world, including News Ltd in Sydney, there’s been a senior management change overnight. MySpace is leaderless again. How about an in-depth story in the Weekend Australian, or the Herald Sun about why Owen Van Natta, hired by the Rupster last year, has been forced to walk the plank by another Murdoch hire, Jonathon Miller? To get help go to this story in The Financial Times after reading the word of God. The official statement is the usual spinner-concocted drivel. The FT story has all the gore and infighting (Now is that a surprise at News?). The upshot is that MySpace is as stricken as it was a year ago and is obviously losing more money. Does Rupster have a digital strategy, apart from finding a way to drag/force/con other media groups into supporting his incessant demands for paid content? If Murdoch can’t or won’t keep executives who know the digital world, what is the 78-year-old doing? Taking afternoon naps?

Beware of Greek horses, Paris. Let’s get straight to the point about Greece and its appalling financial position. It’s all their own work, even the high-profile Nobel Prize-winning economist Joe Stiglitz would have to concede that, though judging from his comments (he’s an adviser to Greece), he has been avoiding this sensitive issue. But one of the rules for being a consultant is don’t upset the paying client. But the reality of Greece’s predicament is that decades of Greek profligacy, manipulation of financial statistics, public sector corruption and tax evasion have left the country all but skint and reliant on support from the rest of Europe. No one else is to blame (perhaps the European Commission might have been more rigorous in assessing Greece’s statistics). But Joe and others do have a point when they say that if it was good enough to bail out banks that stuffed up through greed and incompetence, then its Greece should be helped. Obviously its a case of “moral hazard, what moral hazard?” The latest statement from the European Union supporting Greece was long on words and short on detail, an attempt to con the markets into believing that the EU will back Greece to the hilt, including bailing it out. The Financial Times Lex column summed it up nicely: “So far, it boils down to two ingredients: tough love with a dollop of fudge on top.”

Chinese dirt # 1. It’s the wonders of recent times, the hottest commodity in global markets isn’t the usual suspects such as oil and gold, it’s dirt, or rather dirt from places in Australia and Brazil that have an iron content above 50% and preferably well above 60%. BHP and Rio Tinto saw their earnings jump faster than expected because the Chinese steel mills want more dirt. Vale, the biggest iron ore miner miner of all saw a good result in the 4th quarter, profit up 11%. But the company surprised with the following warning: “In 2010, Vale faces a tight situation, as even running its iron ore mines and pellet plants at full capacity we will struggle to satisfy client demand. Our largest projects are scheduled to come on stream from 2012 onwards, with a very small capacity increase in the near term.” Don’t know about you, but to me that’s a big message to BHP as Rio to go as hard as possible for price increases in the current talks with Chinese and Japanese mills.

Chinese dirt #2. Even though imports last month into China fell, that was due to the fall in stock building ahead of the New Year celebrations starting this weekend. Demand remains strong from China, and is growing again in Japan and South Korea. Big Japanese steel mills have boosted March quarter production by 50-100% in some cases. The big three companies are at the start of talks with Japanese and Chinese mills. It now looks like the trio will repeat its move of last year and settle first with the Japanese and leave China to last. 2010-2011 prices (from April 1) could end up about $US90 a tonne, up from the $US61 a tonne in the current year and back at the record level in 2008-09. That 50% rise is more than market forecasts for rises of between 30% and 40%. But there’s even talk of more because the Indian iron ore suppliers are under rising pressure to switch their exports into the growing domestic market. World spot prices are about $US120 a tonne, including freight. BHP said this week that it sold 46% of its iron ore exports on the spot market, meaning it got higher than contracted prices for much of the December half.  Big price rises for dirt mean more money for the two companies and will boost our terms of trade. even more reason for interest rates to rise over the year?

Stimulus good, Stimulus bad. Thank China, again. Stimulus good in China, bad in Australia? Many shareholders in this country moan and groan about debt and deficits, but they have the federal Government and Reserve Bank to thank for their higher dividend payouts this reporting season. The stimulus spending and low interest rates, plus measures like the first-home-buyers scheme, have helped steady and then increase sales and profits for much of corporate Australia. But there’s another they should thank. China. In fact BHP and Rio shareholders can thank China’s $US585 billion of stimulus spending and madcap bank lending last year (and soaring demand for dirt). BHP lifted its dividend; yes it was just one US cent, but it’s the principle. But last night Rio Tinto’s 33% rise in 2009 earnings was accompanied by the restoration of  dividend payments by the group: 45 USc a share. The company didn’t pay a dividend in the first half of 2009, so the final dividend effectively covers the year. Rio paid $US1.11 a share in 2008. Rio has gone from being the weakest of the big four of global resources, to returning to the fold with BHP, Xstrata and Vale. It rejected Chinalco, went with a huge right issue last year and sold assets. That and the rebound in iron ore, thanks to China’s recovery, has saved Rio from its $A44 billion Alcan debacle.

Now this is a Chinese bubble. No wonder the Chinese Government moved quickly to try and bring bank lending under control. The figures for January give every indication that they had lost control of banks they actually control. Bank loan statistics for last month were released yesterday and showed state-owned Chinese banks (that’s all of them) pumped out a massive 1.39 trillion yuan (or $US203 billion) last month, much which that happening in the first three weeks when about 1.1 trillion yen was disgorged. The amount if loans exceeded the total for the 4th quarter of 2009 as a whole. It was four times the 379.8 billion yuan lent by banks in December. Property prices in 70 cities rose 9.5% in January from a year earlier, the fastest increase for more than a year and a half. Car sales hit a record 1.6 million last month, about the same level of total output of all types of vehicles.

Educating the chook. Opposition finance spokesman Barnaby Joyce asked Treasury secretary Ken Henry yesterday in Senate Estimates whether it was a fair statement that if Australia kept borrowing money and debt kept getting larger, that it would put upward pressure on interest rates. According to AAP, the Treasury secretary, who saves hairy-nosed wombats in the backblocks of Queensland (But not puce-faced accountants from St George) replied: “No disrespect senator, but that is a gross over-simplification of economic understanding of these matters. We should be careful not to run into simplistic relationships between levels of debt and interest rates.” Quite.

Dr Henry said that as government debt was being repaid (by the Howard Government) earlier this decade, interest rates were steadily climbing. “That is not altogether surprising because governments have an enhanced ability to repay debt as their fiscal positions improve, that’s fairly obvious. Fiscal circumstances improve as the economy strengthens, that’s also fairly obvious. As the economy strengthens, other things being equal, there’s increasing upward pressure on prices, and monetary policy responds to that.” As we saw with the surprisingly strong jobs figures yesterday. But those figures in themselves were a puzzle: hours worked fell again, but more than 54,000 jobs were created. As Manuel in Fawlty Towers would say, Que? Barnaby would have earned his spurs discussing that apparent paradox with Dr Henry instead of the debt drivel that Tony Abbott wants him to fixate on.

I think there’s something in this. The competition regulator, the ACCC, seems to be sending yet another to corporate Australia about the limits to industry consolidation. It has already dropped broad hints in petrol (no to Mobil Caltex), small electrical appliances (no to GUD-Breville), share registries, (perhaps no to Link, Newreg). Now, there’s sudden doubt about the future of the takeover bids from AMP and the NAB for AXA Asia Pacific. The commission has linked the two bids for AXAAP into one, wide-ranging investigation that could decide the shape of competition at the top of the financial services sector, especially moves by the Big Four banks to expand deeper into funds management and associated services. Having indicated that it would release its separate ruling on Wednesday on AMP’s now-failed $4.4 billion offer for the Australasian operations of AXA AP, the ACCC instead elected to hand down a comprehensive judgement next month on both proposals. This will take in the effects of NAB’s agreed $4.6 billion bid for the same businesses — an offer that trumped the earlier AMP proposal. From the issues paper from the commission, the NAB is in trouble. Will AMP get a clear run?