Australian traders should be smiling, as the market opens today.

They have had a strong lead from Wall Street.

The Dow Jones industrial index rose sharply overnight, as financial shares – and  the US economy – both gathered strength.

The DJ index closed  212.67 points higher at 11,715.18.
This was the third consecutive day of rises on this key indicator.

The S&P 500 index also gained 19.02 points to close at 1,300.68.
And the tech heavy NASDAQ composite index put on  29.18 points to close at 2,411.64.
And oil prices eased, despite Tropical Storm Gustav.

Oil futures tumbled $US2.55 a barrel to $US115.60.
A short time ago, the $A was trading at 86.18 US cents.

New figures showed that the US economy grew faster than expected in the second quarter.

This was attributed to export gains.

But Louisiana is preparing for a hurricane, as Gustav approaches.

The signs are all there.

Small business confidence has hit a new low.  Business lay-offs are rising.

Inflationary pressures have eased.

The domestic economy  seems close to stalling.

And Australia’s big four banks have even cut their fixed home loan interest rates, for a second time.

So a rate cut – after 12 rises – seems certain, next Tuesday.

Doesn’t it?

Especially as the Reserve Bank, itself, has been raising expectations of a cut, by the way it has been talking.

And it’s no secret that the bank likes to fulfill expectations, when it can.

So what could, possibly, go wrong?

That’s a good question, as it happens.

The politicians, in Canberra, have been playing chicken with the budget.

The government is warning that the rate cut, expected next week, could be deferred.

It says that’s because the Coalition is planning to punch a $6.2 hole, in its $22 billion budget surplus.
That’s just politicians squabbling, though, isn’t it?

Probably.

But there is, certainly, an outside chance that the Reserve Bank board will do just that.

And if it did, the government would certainly use that event to put even more pressure on the Coalition to pass its budget, intact.

The Treasurer, Wayne Swan, is accusing the Coalition of “economic vandalism.”
The increase the government is planning in the luxury car tax, its new excise on condensate and a string of other measures would all go, if the Coalition gets its way.

And, Swan says, that could make the bank’s board nervous enough, to defer the rate cut that would, otherwise, have been a dead cert, next Tuesday.

The government’s first round of haggling, with recalcitrant Senators, is now in sight.

The Coalition has decided to block the government’s plan to lift the Medicare levy threshold to $100,000 for singles.

The opposition doesn’t have the numbers in the Senate to block that measure, by itself.

A small clutch of Greens and independents now holds the balance of power.

A former Prime Minister, Paul Keating, despised the Senate, dismissing its members as “unrepresentative swill.”

The new government of Kevin Rudd will have to be more diplomatic.

And Family First Senator, Steve Fielding, has already set his terms, in the latest stoush.

He says he will not vote for the government’s bill, unless low income families withhttp://privatebriefing.com.au/2008/08/28/how-inflation-hits-working-families private health insurance are compensated.

He says these families are those least able to afford private health insurance.

But they make that choice, to protect their financial security.

“They already provide a rebate,” Senator Fielding said.

“That rebate needs to be looked at to work out how we can compensate low income families,” he added.

The Federal government admits that the nation’s pensioners are “doing it tough”, but new figures show it is ordinary Australian families that suffer most from inflation.

The figures, produced by the Australian Bureau of Statistics, track the financial fate of various family types.

They show that the costs faced by “employee families” rose by 5.7 per cent over the past year.

That is well above the nation’s overall inflation rate of 4.5 per cent.

These families were hit hardest, because they use more fuel and have bigger mortgages than, say, pensioners.

The costs, met by pensioners, rose by just 4.3 per cent over the year.

But, as the government acknowledges, pensioners aren’t having it easy, either.

Food, for example, takes a 21 per cent bite out of the typical pensioner’s income.

The food bills, for working families, add up to just 16.4 per cent of income.

That is slightly lower than the 16.8 per cent of income that self funded retirees spend on food.

Australia’s pensioners, overall, spend 5.1 per cent of their income on clothes and shoes.

But, even that, is slightly higher than the 4.3 per cent that working families spend on the same items.

A weak recovery on Wall Street gathered strength overnight, as traders took heart from stronger orders for durable goods and dismissed a spike in oil prices as temporary.

The Dow Jones industrial index rose 89.64 points on the day’s trading to 11,502.51.

The S&P 500 also rose 10.15 points to 1,281.66.

And the tech heavy NASDAQ composite index rose 20.49 points to 2,382.46.

Oil futures rose $US2.10 a barrel to $US 118.37.

But traders dismissed that rise as temporary because it coincided with a storm in the Gulf of Mexico.

The $A was trading at 85.53 US cents a short time ago.

The Dow Jones industrial index has now risen on four of the last five trading days.

One analyst said it seems to be adopting a firmer tone.

But another said the improvement in durable goods sales, while welcome, is still “not great.”

Those sales climbed 1.3 per cent in July, mainly on exports.

That rise was not expected.

The troubled housing institutions, Fannie Mae and Freddie Mac, both saw gains, in US trading, overnight Australian time.

Share prices on Wall Street staged a small rise overnight, as energy stocks advanced.

The Dow Jones Industrial Index rose 26.62 points to 11,412.87.

The S&P 500 rose 4.67 points to 1,271.51.

But the tech heavy NASDAQ composite index closed 3.62 points down at 2,361.97.

Oil futures rose $US1.09 a barrel to $US116.20.

And the Australian dollar was trading at 85.61 US cents a short time ago.

Although still weak, consumer confidence is now rising in the United States as the slump in house prices shows signs of slowing.

But other prices are creeping up again, and the Fed is now indicating that it will increase US interest rates, in the near future.

The Fed made that clear, when the minutes of its closed door meeting on Augst 5 were published yesterday.

Energy stocks led the limited gains that were made in the price of shares traded on Wall Street yesterday.

But information technology and consumer related shares fell slightly.

Trading volume was light, at just over 856 million trades.

>Australian kids are digital natives,but the use of computers in their education is so far behind neighbouring countries, like Singapore, that they may never catch up.
> One of Australia’s leading  educators, Cheryl O’Connor, assesses this situation, very bluntly.
>”It is a scary picture,” CEO of the Australian Council of Educators said  at the launch of a critically important new book, leading a digital school.
> One its two editors, Mal Lee, says “unashamedly” that the situation developed in the Howard years.
> But Lee, and his fellow editor, MikeGaffney also criticise Kevin  Rudd’s pre-election promise of a laptop for  every student, in the final years of high school.
> …school laptop programs – even when’part subsidised’ by parents are immensely expensive, as well as being of questionable educational value, they say.
> The clutch of authors, who contributed, argues ­ frighteningly – that  Australia is still educating its kids for jobs in an industrial society that no longer exists.
> However the authors broadly  welcomed the Rudd government’s commitment to IT education
> They also acknowledge that the march of technology never stops.
> Roger Hayward, a former principal  of Saint Leonard’s College in Melbourne said  he noticed, about four years ago, that many of  that school’s students stopped carrying their  notebook computers to school, and started bringing flash drives instead.
>More recently, I noticed that they had moved on.
>They use their Ipods to transfer their files.
> And they ALL have Ipods, he said.
> Lee and Gaffney, did ask, though, why schools should spend heavily on laptops, when students have their own computer space at home, and can bring their work to school with an inexpensive USB drive.
> Their doubts go to cost-effectiveness.
Better educational and more cost efficient use can be made of technology within the home and the school they say.
> Other authors suggest that  interactive whiteboards might be more appropriate, in some cases, than notebooks.
> The reality, though, is that Labor’s IT education revolution can accommodate all of this.
> The Rudd government has merely promised to spend $1 billion, over four years,  upgrading information technology in Australia’s schools.
> If a particular school believes that interactive whiteboards are better than ndividual laptops, they are free to make that choice.
> The political reality, though, is  that Rudd will never be allowed to forget his  pre-election promise, that every Australian > student, in years 9-12, will have access to his or her own computer.
> Just as, Bob Hawke, is constantly reminded of his 1987 promise that “by 1990,no Australian child will be living in poverty.
> Hawke, himself, has since admitted  that this was just a silly shorthand way of speaking.
> Rudd might rue his laptop promise one day, too.
> But basic questions must be asked.
> Does information technology, for example, really have a place in the classroom?
> Does it really contribute to a child’s education?
> David O9Brien, principal of the  Ingle Farm primary school in South Australia has no doubt about that.
> He says that, used properly, information technology can “encourage  creativity, experimentation and collaboration.
> He learnt that by studying how good video games work.
> Ingle Farm is in an area of  significant poverty with relatively high  levels of Aboriginal and non-English speaking students.
> Yet, against all the odds, it has become a very effective digital school.
> Creativity, experimentation and the ability to work collaboratively are highly  valued qualities, in the 21st Century job market.
> With 12 authors, this book is not ascohesive as it might have been, with a single,  well-qualified writer, working to a tight plan.
> It is occasionally repetitive.
> And, in parts, it reads like a repair manual.
> But if you are putting a digital  school together, these will be its most valuable passages.
> For the ordinary, worried parent,though, there is a very powerful lesson in this book.
> That is that kids, who have all the  latest gadgets at home, as most do, can easily  become bored at school, if they have to fight to use scarce  out-dated equipment there.
>As educational IT pioneer, Peter Murray points out students behave begun to notice the massive discrepancy between what they can do at home and >what they can do on site at school.
>They are demanding ICT environments where teaching and learning take precedence.
Murray says school leaders are also becoming aware of this digital divide.
>And they are asking their IT staff to open up access to the school’s computer equipment, without relaxing their vigilance, in keeping internet nasties out of the school sytems.
>Lee and Gaffney are evangelists of the IT era in education.
> “The shift to a digital operational mode  offers schools immense opportunities to provide  students with a quality education for the twenty first century, they say.
>By Ëœgoing digital,,  schooling takes on different forms to what we have known to this point in the history of education.”
> Their view demands close study.
> And this book provides that opportunity.
>leading a digital school published by the Australian Council of Educational Research Ltd.

The Federal government is insisting that the Coalition’s plans to block tax measures, worth $6.2 billion in the Senate could put interest rates cuts at risk.

The  opposition, though, argues that this is nonsense, as the government is looking at budget surpluses worth a total of some $96 billion, over the next three financial years.

The argument was pursued, with some heat, in the Senate yesterday.

Senator Stephen Conroy, who represents the Treasurer in the upper house, described the Coalition’s stand as “unconscionable” in view of the present turmoil on world markets.

But the opposition pressed its argument that the government is trying to curb inflation by raising taxes.

It is opposing the so-called alcopops tax, measures to increase the luxury car tax and the imposition of an excise on condensate.

Senator Conroy lectured the opposition, as question time opened.

“It is the total size of the budget surplus that matters,” he said.

The government is budgeting for a $22 billion surplus this financial year.

Conroy said the Reserve Bank, which has signalled that rate cuts are likely, might well review its thinking, if a “massive hole” was blasted in the budget surplus.

A clutch of Greens and independents now holds the balance of power in the senate.

It’s not the best of times.

It’s not the worst of times.

But it is the time that Australia and the United States signed an agreement, permitting a mutual recognition of each other’s financial instruments.

Right now, that might strike fear into many Australian hearts.

But the Federal Superannuation and Corporate Law minister, Nick Sherry, who signed the deal for Australia, says there is no cause for alarm.

“The agreement will provide greater access to the US market for Australian investors,” he said.

At the same time, though, it would maintain strong investor protection and ensure market security, Senator Sherry added.

“This will mean retail investors in Australia will be able to enjoy access to the US market, directly through Australian brokers,” he said.

“The word ‘enjoy’ might seem a little strong to some players, in view of the state of the US market.

But Senator Sherry is using it confidently.

Even to the point of using it again

He also said Australian investors who did this would ‘enjoy’ Australian regulatory protection.

He described the agreement as one of the most critical steps the government could take to build Australia as a financial services hub.

The decision was broadly welcomed by Australian financiers.

Shares on Wall Street fell sharply overnight as worries over the financial sector persisted.

The Dow Jones industrial index plunged 241.81 points to 11,386.25.

This was its biggest fall for more than a month.

The S&P 500 index fell 25.36 points to 1,266.84.

And the NASDAQ composite index lost 49.12 points to close at 2,365.59.

Oil futures rose 80 US cents to $US115.39 a barrel.

These results, from the first day of trading in the new US week, were the first point losses in four days of trading.

All 30 sectors in the Dow Jones index finished in the red.

The $A was trading at 86.76 US cents a short time ago.

More American families are now losing their homes, as their mortgage holders foreclose.

This has increased home sales figures in the US.

But it has depressed home prices.

One analyst predicted that there will be no rebound in US house prices until well into 2009.

Kevin Rudd is getting tough with families who do not send their children to school.

Under a trial scheme, just announced by the Education Minister, welfare benefits will be cut, in such cases.
The scheme will operate, initially, in the Northern Territory and Western Australia.

But the government’s plan is to extend it throughout the nation.

Ms Gillard says the radical plan will remain “a last resort.”

But she says about 20,000 Australian kids are not attending school at present.

“We want to fix that statistic,” she said.

“We are concerned about it.”

The scheme will apply initially to six communities in the Northern Territory and to one in the Southern Perth suburb of Cannington.

“The message here is crystal clear.

“And that is that the children need to be in school,” Ms Gillard said.

“That’s a high priority and we are reinforcing it through the legislation,” she added.

Cash shortages are more dangerous to small business operators now than ever.

That’s because their usual source of back-up finance might not be available.

The accountancy association, CPA Australia, says that’s because of the credit crunch, which started in the United States.

And it says this makes good cash management practices more important than ever.

A survey, conducted by the association, showed that 41 per cent of respondents never prepare cash flow forecasts.

And 25 per cent never chase up late payments.

“This could be a recipe for disaster,” the association adds.

The survey also showed that 72 per cent of small business owners would seek a short term injection of funds, if they struck financial difficulties.

And 71 per cent believed their financial institution would help them, if that need arose.

But the association’s business policy adviser, Gavan Ord, said this confidence might not be justified, in view of the spreading credit crunch.

“This has potentially serious consequences for some businesses,” Mr Ord added.

He said it is much easier to rectify financial problems if they are identified early.

Australian traders will start this week with a positive lead from Wall Street.

But instability continues.

The Dow Jones index posted a rise of almost 200 points Friday (US time).

But the US economic outlook remains weak.

Home sales are still close to their lowest level in 10 years.

And consumer spending is subdued.

US traders are expected to take their cues this week from new data on both housing and shopping trends in America.

But serious doubts still hover over possible rescue plans for the housing giants Fannie Mae and Freddie Mac.

Investors fear that any move of that kind could leave them out in the cold.

The Dow Jones industrial index rose 197.85 points Friday, to close at 11,628.06.

The S&P 500 rose 14.48 points, to 1,292.20.

And the NASDAQ composite index rose 34.33 points to 2,414,71.

Meanwhile oil prices, which fluctuated heavily last week, fell sharply on Friday.

Oil futures dropped $US6.59 a barrel to $US114.59.

A short time ago, the $A was worth 86.89 US cents.

The Coalition’s Treasury spokesman, Malcolm Turnbull, is urging the Federal government to make a major economic statement, setting out its plans for Australia.

Mr Turnbull accused the government of displaying incompetence, as the economy turned down.

Addressing the State Liberal council in Victoria, Mr Turnbull said Kevin Rudd had presented himself last year as the motorist’s friend and the shopper’s advocate.

“The empathy of 07 is replaced by the impotence of 08,” Mr Turnbull said.

Meanwhile his boss, the Opposition Leader, Brendan Nelson, accused the government of doing nothing to restore either business or consumer confidence in Australia.

Dr Nelson said both business and consumer confidence had plunged to levels not seen since the early 1990s.

“The responsibility of government is to do everything it can to drive confidence in the business community,” the Opposition Leader added.

Dr Nelson, too, said that a major economic statement would help to create optimism and confidence.

The opposition is planning to press this argument, when parliament resumes on Tuesday, after its two month winter break.

The shadow of job cuts at Ford and other industrial plants will hang over the Federal parliament, when members and senators take their places on Tuesday.

The Federal government is warning that the Coalition could put interest rate cuts at risk.

The Finance Minister, Lindsay Tanner, said the Reserve Bank would find it harder to cut rates if the Coalition blocked key budget measures in the Senate.

The opposition cannot do that alone.

It would need the support of at least one of the seven independent Senators, to defeat those measures.

That situation could be tested this week, when Federal parliament resumes for the Spring sessions.

The new Senators will sit for the first time this week.

The Federal opposition leader, Brendan Nelson, said the opposition won’t block the government’s entire budget.

But he said this year’s budget contained several tax increases, which the government did not mention before last year’s election.

He said these include the so-called alcopops tax.

“If you are fighting inflation, the last thing you do is increase taxes on alcohol, software and the other functions of business,” Dr Nelson said.

But Mr Tanner said the independent Senators would not matter if opposition senators voted with the government on these measures.

He said if they did not, the coalition could well be held responsible for keeping interest rates high.