*Already Chinese and Indian companies are looking for other places to buy their coal and iron ore*

Sure they are. Easier said then done. Have you seen the massive
infrastructure investments in our NW for iron ore? Its taken 40
years to build and these are now tier 1 assets, so lowest cost
producers, through capital investments and economies of scale.

It now costs BHP something like 25-30$ a tonne to mine and load
a tonne of iron ore, versus a sale price of 160$. So there is
plenty of margin, or they would not be increasing their investments.

To go and invest mega billions in ports and railways in places like
Africa, only to have the local dictator change and change the rules,
is not for the faint hearted, as Rio have discovered. So I would
not panic just yet. Even if prices drop, substantially, they are
still well over the cost of production.

*You can never tell what is around the corner with free trade.*

You can never tell what is around the corner for the world, Vanna,
never mind free trade. So you have to forget being a control freak
and change as times change. Get your fundamentals right. Then you
can invest, as BHP, Rio, Chevron and the rest are doing. 500 billion
Dollars worth.

A diversified economy spreads the risk, today's Australian carries
a story about the liberals planning to build some dams up north
and doubling our food production, to feed 120 million instead of
60 million.Such industries can't go ahead with overpriced inputs.

An efficient public service would be nice, but that would be dreaming.

As EU politicians are discovering, all their dreaming about the
EU actually working, might well be at the point of collapse. So
much for politicians trying to go against the market with their
plans. The law of unintended consequences is never far away

We should be talking about fair trade not free trade.Our Govts here tie our hands with ridiculus regulation,taxes and red tape and expect us to compete with countries that not only don't have this but workers who work for less and $1 per hour.

The carbon tax will further send off shore what little industry we have left.A service industry is not needs based.People can do many things themselves and jobs in harder times will just evaporate.

There is no point in having dirt cheap goods and food if you don't have a job and thus an income to buy them.

Yabby said;
To go and invest mega billions in ports and railways in places like
Africa, only to have the local dictator change and change the rules,

However China has done it !
If the local dictator gets difficult they will simply give him more.

The rules are being changed.
When I first heard about peak oil and its effects earlier in the 2000s
it was hard to get my mind around it. There were not many books and
it was all about the physical shortages that would occur.
Now in hindsight the experts on the subject are describing the
economic effects before physical shortages occur.

The "Arab Spring" came about because Egypt's oil production peaked
and declined, reducing government food subsidies and the demos in
the square were originally about food prices.

The US got itself into trouble when petrol got so dear that it was
buy food (more expensive because of ethanol), petrol or mortgage.
Although fuel was eating their GDP they kept borrowing.

Europe same thing, fuel ate their GDP and they kept borrowing.
Same here, fuel is eating our GDP and we kept borrowing.
That is why NSW, Victoria and Sth Aus are in recession but WA & Qld
are digging holes and getting loads of money in exchange.

The first book I read was by Kenneth Deffeyes an oil field engineer
and one of his predictions was recessions and rioting in the streets.
However he predicted this to occur after oil production peaked.
It has recently been suggested that economic peak oil occurs before
the geological peak oil. The suggestion is that rising oil prices eat
into GDP which is normally used to repay loans and interest.
Since the early 2000s the price of oil has risen 4 to 5 times.
That has had an impact.
Read this, it might explain some things;

http://www.energybulletin.net/stories/2011-09-16/odac-newsletter-sept-16

Squeers and Poirot,

Sometimes i watch shows about how the West dumps all of its used computer products in African countries and am ashamed as i watch young kids and adults forage in dangerous environment burning of the plastic for a tiny bit of copper or something else.

I also know that many of your products are produced in developing nations where the squeeze on them to produce at a low cost forced even more exploitation and/or env degradation.

However, i still maintain, perhaps i am too optimistic, that open societies are more likely to bring attention to such issues, and perhaps temper our abuse of other people and the environment over time.

Yabby,
The top 5 coal producers are USA, FSU, Australia, Indonesia and South Africa.

An importer can easily switch between countries, depending on whatever deal is being offered to them.

So now we hope that China or India don’t stall in their consumption, or swap countries.

The US had much manufacturing infrastructure, now mostly idle or derelict, with official unemployment at 9%, (but unofficial unemployment at 20%), and jobs at 0 growth, and 1 in 6 on food stamps.

Australia had much manufacturing infrastructure, but we let that go in favour of primary production and mining.

Now the profits per acre on many farms have been in decline for some years, meaning that farmers have often flogged the land to increase their falling profits, and the soil erosion in the WA wheat belt is an example of the results. Many farms elsewhere in Australia are barely viable also, and Australia is now importing large quantities of food, hoping that farms in other countries remain viable.

“But everything is cheaper” claims the free trade advocate. “An importer can just rock hop from one country to the next to get the best prices”

Until resources run out in each country, and then everything suddenly becomes much more expensive.

*If the local dictator gets difficult they will simply give him more.*

In that case Bazz, those resources are not going to be cheap. China
is spending a fortune in Africa with no certainties, so they are
hardly going to get a bargain.

Yes, energy users are paying more for energy and energy producers
are benefitting from that. So what? Are only Westerners entitled
to live well? If Europe and the US had not borrowed so much,
they would not have a problem now. No different to households who
spend more then they earn and max out on the Visa card.Just much
bigger.

The latest Economist is recommending a book on the state of energy
globally, which they claim to be accurate. Its being released on
the 20th Sept, so I'll download a Kindle version.

*An importer can easily switch between countries,*

So Vanna, is the price of coal dropping?

*The US had much manufacturing infrastructure, now mostly idle or derelict*

Not really Vanna, they still have a huge manufacturing industry,
increasingly automated with robots and the rest, so requiring fewer
workers. But their building industry is stuffed right now, so
until they start building things like houses again, unemployment
will stay high. People are busy paying off debts, for past sins.
There is a price for that. Its the same in Australia.

*and Australia is now importing large quantities of food,*

We export two thirds of the food that we grow and we import other
foods. The difference is that we export boatloads of commodities
and import processed foods. So what? My tinned guavas come from
South Africa, my passionfruit pulp from Peru. What is wrong with
you people to think that we should only be exporting and not
importing anything? Virtually all the lamb that I produce is
cut up and goes to about 50 different countries. Farmers in
Australia benefit. They spend money, other Australians benefit.