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The Forum > Article Comments > Private equity, derivatives, bubbles and busts > Comments

Private equity, derivatives, bubbles and busts : Comments

By James Cumes, published 3/1/2007

When Qantas hits trouble and the bubble bursts we will wonder at the greed and how we allowed it happen.

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I would not wory about Qantas too much. If they are silly enough to buy
into the airline industry when peak oil is coming over the horizon then they
are welcome to it. Airlines will be the canary in the mine.
Airlines and toll roads will be the first to look bankruptcy in the face.

Anything with, like toll roads, long term loans will be up against it.
With petrol in the $5 to $10 a litre range sometime in the next five years
would you enter into aircraft purchases that need 20 years to pay off ?
BTW Macquarie Bank got out of Cross City Tunnel Road. I think they
pushed it off to some other sucker. Some of the other banks did however get caught.
Posted by Bazz, Monday, 8 January 2007 11:44:45 AM
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Bazz “I would not wory about Qantas too much. If they are silly enough to buy”

I would whole and absolutely agree with your statement.

Private individuals exercise their own choice in decided where to invest.

Be it Qantas or Telstra (IMHO - another one to steer well clear of )

The superiority of private ownership is evident when compared to public ownership (nationalized industries and government owned corporations etc).

The tax payer does not get a say in where his “investment taxes” are placed, how he benefits from what sort of return they might generate or what sort of monopolistic subsidy is provided for staff and other vested interests from the money the tax payer provides.

If Qantas were to fail, another airline would negotiate to fill the gap. I recall back a couple of decades how some other dinosaurs failed to make the transition into the rules of the modern economy. Panam and TWA have both gone from being the joint flagships of American passenger airlines to extinction in less than three decades.

Today American Airlines and Eastern seem to rule, I think Delta might still limp along and of course Virgins of differing hues offer cheap “passage” to all (so to speak).

Similarly a hundred PC and Notebook manufacturers / labelers clamber over the strategies of a once Dominant and unassailable IBM.

The world keeps on turning, oblivious to the plans of men.

Let them who take the risk benefit from the spoils and them which take the risk bear the consequences.
Posted by Col Rouge, Wednesday, 10 January 2007 2:42:04 PM
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Hello Col; When QANTAS goes belly up there will be lots of other
airlines in the same state. How would you like to be paying off a fleet
of Airbus 380s when economy fares were reaching $20,000 to $30,000 for
a ticket to London ? All this tied in with a recession.

I sold my Qantas shares but I am blowed if I know what will be a good
investment when it hits the fan. Still may have five years to think about it yet.
I wonder why uranium miners have gone through the roof ?
Hmmm. Perhaps they know something.

One suggestion is to buy good farming land around Sydney as there will
be an expansion in market gardens close to cities and towns.
The days of the 3000km salad are numbered.
Posted by Bazz, Wednesday, 10 January 2007 3:32:16 PM
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