Shareholders don’t necessarily  stand behind other creditors these days, in the queues that form after  company collapses.

Their claims, for a little of what is left, can be as good as any-one else’s, if they were misled when they bought their shares.

That, at least, is the broad thrust of  the decision the High Court took, in the case of a small investor,  Luke Margaretic, who bought shares in the historic Sons of Gwalia mining company, shortly before it failed.

In a six-one decision, the High Court confirmed the decisions of  lower courts, which had ruled that Mr Margaretic had this  status, because he had been misled, when he bought the shares.

Sons of Gwalia had collapsed, essentially, because one of its senior officials had been engaging in secret trades, without authorisation and  had chalked up huge losses, over several years.

The Margaretic case, though, upset long-standing traditions of that had  governed who stands where, in creditors’ queues.

As part owners of the failed company, investors were traditionally believed to rank well behind ordinary commercial creditors.

Understandably, the Margaretic case raised tempers.

And one leading law firm, Malleson Stephen Jaques, warned  that unless the law is changed urgently, the Margaretic decision would present “significant practical problems for current insolvency administrations and future administrations.”

With Australian companies collapsing right and left, as a result of the global economic crisis, that issue could hardly be more critical than it has now become.

So should the law be changed, to put investors like Mr Mrgaretic, back in queue, as tradition once demanded?

The Howard government sought official advice on that point, during its last year in office.

And its successor, the Rudd government has just received it, from the experts in the Corporations and Markets Advisory Committee.

But the news, for administrators, is not good.

The Minister for Superannuation and Corporate Law, Nick Sherry, put out a statement yesterday “acknowledging” release of the CMAC report.

And he said the government would “closely examine” the committee’s report.

But, critically, he noted that the committee had recommended that the current law, as reflected in Mr Margaretic’s case, “be retained.”   Senator Sherry declared that  the government would “closely examine” that recommendation.

Translated from  Canberra’s bureaucratic speak, that means “If you think we are going to overturn a High Court decision  just to keep lazy  accountants and lawyers happy, you’re mad.”

Yes, the administration of failed companies’ affairs will be more difficult in future, just as the lawyers and accountants had feared.

But there is always a bright side.

Their fees will be bigger, too.

The Treasurer Wayne Swan now accepts that the Australian economy is in for a very rough time.

That means that you are, too.

In a statement issued early today, Mr Swan noted that the International Monetary Fund has, once  again, downgraded its forecast of global economic growth.

“The IMF is now forecasting that the global recession will be much deeper and more protracted than previously envisaged,” he said.

The news was, indeed, very bad.

The IMF now expects global growth this year to be just o.5 per cent.

And, what’s worse, it is predicting that  advanced economies will contract by 2 per cent, collectively, in that time.

The IMF is now forecasting, also, that China’s growth will be just 6.7 per cent this year.  That’s half the growth China recorded in 2007.

“It is inevitable that Australian jobs and growth will be affected,” Mr Swan said.

The Treasurer said the Rudd government had taken decisive action to protect Australians from the worst impacts of the downturn and would continue to do so.

Perhaps oddly, though, the IMF’s widely expected predictions had little impact on Wall Street, where share prices surged in early trading.

That surge was based on rumours that the Obama administration will set up a bad bank, to buy the toxic debt that is clogging the books of America’s commercial banks.

The Dow Jones index was still almost 167 points up, shortly before 3pm, New York time, even though the rally had eased by then.

Australia is heading straight for a recession.

It might still escape. But that now seems unlikely.

And the Federal government is becoming cagey about what else it might do, to meet this challenge.

The increased risk of recesssion became evident yesterday, when the results of the latest Westpac Melbourne-Institute leading index caluclations were published.

That indicator – for November – stood at -2.2 per cent, well below its long term average of 3.5 per cent.

Three times before, when a similar negative indicator appeared, the Australian economy went into outright recession.

On two other occassions, when the same thing happened, Australia escaped, merely chalking up very slow growth, instead.

Westpac’s chief economist, Bill Evans, was blunt, though, about the likely implications of the latest data.

He said it “…intensifies the risks that the Australian economy will contract through 2009.”

The Statistician also reported yesterday that Australia’s headline inflation rate fell from 5 per cent to just 3.7 per cent, on the December quarter consumer price index figures.

Falling fuel prices took most of the credit for an overall fall of 0.3 per cent in the index, over the quarter.

However, at 3.7 per cent, Australia’s underlying inflation rate is still above the Reserve Bank’s target rate of 2-3 per cent inflation, over the course of the business cycle.

Even so, a substantial cut in the nation’s interst rates can still be expected when the bank’s board meets next Tuesday.

That’s because, as the Treasurer Wayne Swan notes, inflation is no longer the main challenge facing Australia’s policy makers.

That honour has now gone to sustaining the economy and keeping jobs.

Mr Swan is still saying that the government still stands ready to take any extra steps that might be needed, to achieve those goals.

But he was tight lipped, when he met reporters in Canberra yesterday, about when and how the government might act, on these matters.

Fresh stimulatory measures, that will drive the Federal budget into deficit, now appear to be inevitable.

Business groups, including the Australian Chamber of Commerce, are pressing for tax cuts.

And the government is listening, even though cutting taxes is not a particularly efficient way to boost the economy.

The Federal government’s decision to spend $4 billion, to support large scale  commercial construction projects, has shown that it is prepared to take unconventional steps  to preserve jobs.

Welfare groups, which met the Deputy Prime Minister, Julia Gillard, yesterday, are urging the government to increase unemployment benefits.

The government, understandably, prefers measures that will keep Australians in jobs.

That way, its own tax revenues are sustained.

The Finance Minister, Lindsday Tanner, says the Federal budget is probably still in surplus, but “only just.”

New measures, at this stage, would certainly drive it into deficit.

That suggests that the total cost of measures announced so far probably tops $20 billion.

But Australia is far from alone, in its stimulatory policies.

Both Germany and Japan announced big stimulatory packages, overnight.

In Japan, that included a cash handout to all Japanese citizens.

Australia will probably not go that far.

But the Prime Minister, Kevin Rudd, will start consulting State premiers today, on what should be done.

He will get plenty of help, there.

The Federal government’s stimulatory package seems to be sustaining trade and profits.

This shows up in the results of the National Australia Bank’s latest business survey, which have just been releaed.

The survey showed that business confidence and conditions bounced in the December quarter, rising 10 and 11 per cent respectively.

But the bank warned also that the survey still implied no economic growth at all in the December quarter.

And it reported that forward orders and employment both remained stuck at 1991 lows.

However there was good news in the survey results, too.

Specifically, they showed that credit is now at least a little easier to obtain than it was immediately after the global economic collapse last September.

And labour costs were flat.

NAB economist Alan Oster said this was the first time that had happened since the bank started its monthly surveys.

Mr Oster warned, too, that the NAB now expects Australia’s unemployment rate to rise from its present level of 4.5 per cent to 7 per cent, by next year.

The NAB said the government’s stimulatory package had encouraged Australians to shop, io the weeks before Christmas.

However it warned that the measures the government has announced so far will have only a temporary effect on the Australian economy.

The global economic crisis is about psychology as well as economics.

And the Federal Finance Minister, Lindsay Tanner, who makes that observation backs it with some advice.

He does that with a sharp comparison between the fortunes of the nation – and those of its national cricketers.

Australia’s cricketers are performing about as well as the Australian dollar right now.

So what can be done about these testing times?

“A modern nation isn’t quite the same thing as a national sporting team,” Tanner says.

“But the same principle applies.

“When things get tough, we have a choice.

“Do we go on the front foot or the back foot?’

Australia has just lost the current test series to South Africa.

So what is the path back?

Three things are necessary, Tanner says.

“Attack, change and invest in youth,” Tanner says.

That’s  not a bad plan for economic renewal either.

Especially when  the first faint  signs of recovery in the global economic crisis might be appearing.

An overnight report shows that home sales rose, unexpectedly in the US last month.

Sales of existing homes there rose 6.5  per cent last month.

And the New York Conference Board has boosted its forecast of economic activity in the US by 0.3 per cent.

It’s not all good news, in America, though.

General Motors and Caterpillar are still laying of staff  by the thousands.

But mental states matter.

Tanner says public debate, in a downturn, inevitably focusses on “what’s wrong, not what’s right.”

But he says the Australian character is well suited to times like these.

“We try hard. We attack and we take risks.”

Now’s the time to try it.

The holidays are over.

And we are back at work today.

A subtle re-alignment is occurring among the world’s major currencies – and there’s a message in that for you.

The Japanese yen is now close to its strongest level against the once almighty greenback in 13 years, hitting 88.31 to the $US  early today.

With that appreciation likely to continue, it is now safe to say  that  the yen is now acquiring the status of a safe haven, or reserve currency.

But that’s all in the world of high finance, isn’t it.  It can’t mean anything to me, can it?

Sadly, the answer is that changes like these are important to all of us.

To see that, all we need to do is  ask ourselves why this is occurring.

This realignment is happening because the world is rapidly losing faith in the US economy.

Currency traders are betting that the $US will be weak, for most of this year, at least.

It’s not hard to see why.

The US economy, itself,  is weak – and likely to remain that way for 12 months, at least.

Two indicators, in particular, reflect that.

• Established home sales are still falling in America, even though prices have already plunged and
• Republicans are preparing to fight President Obama’s already probably inadequate stimulus package, because they believe it does not contain enough tax cuts.

The yen is also gaining strength against the euro, as the effects of the global economic crisis spread, hitting the German economy particularly hard.

So is the Japanese government delighted about all this?  Probably not.

A strong currency, that acquires even something of the the status of  a global reserve, is certainly a national honour.

But that honour comes at a price.

Sterling’s place, as a reserve currency in the immediate post war years, ultimately became a burden that contributed to Britain’s decline in world affairs.

Those tempted to predict that the US will decline, too, may have a point.  But, we believe, they seriously understimate the resilience of the American economy.

US bankers, in particular, have certainly made their full share of mistakes and their role, in precipitating the global economic crisis, has been huge.

Let us not forget, though, that the role of  the $US as a world reserve currency has also had a small, but still important part, in producing the US recession.

The Federal government is thinking of  supporting  commercial property developers  to save jobs.

The Finance Minister, Lindsay Tanner revealed this yesterday, after warning reporters that Australia faces the grim prospect of heavy job losses, as China’s economic growth slows.

Mr Tanner was blunt about the implications of that slow-down.

“Today’s growth figures from China are bad news for jobs in Australia and bad news for (Australia’s) economic growth,” he said.

Figures released earlier in the day had shown that China’s economic growth slowed to just 6.8 per cent  in the final quarter of last year from 9 per cent in the previous three months.

Senior Federal ministers had previously hoped that China would not be hit too hard, by the global economic crisis, saying booming  domestic demand in the Asian giant would probably take up any slack.

But the latest figures show that is not happening.

Mr Tanner said it is also  becoming clear that there might well be an interruption to normal roll-over finance, for major property developments, such as shopping centre construction.

He revealed, too, that the government has been holding private talks with Australia’s banks, both to gauge the extent of the  possible problem and to assess what might be done about it.

“The issue that is under contemplation is a very specific one and that relates to commercial property,” Mr Tanner said.

“These are all dimensions of what is a very complex problem and one which we are still considering…,” he added.

Mr Tanner said the government must first decide “whether or not we need to take any action.”

“But we would be absolutely derelict in failing to address the question,” he added.

“We have to deal with this issue.

“We have to engage with it,” he said.

Mr Tanner’s remarks, which go further than the broad, but obscure  hints  that Prime Minister, Kevin Rudd, and  his Treasurer, Wayne Swan, have given reflect a tough new pragmatism in the Federal government.

They also challenge popular perceptions of traditional Labor biases.

There would certainly have been mass protests from Labor supporters  if the Whitlam government, for example, had even thought of  supporting private property developers, who were then regarded, by most Labor people as class enemies.

But as the Communists used to say: “Circumstances determine everything.”

And the circumstances the government faces right now are very grim indeed.

Thousands of jobs are already being lost in the mining industry and many more – throughout the economy – are  in great peril.

The Federal government  intervened late last year to bolster credit in the car industry  after big international financiers withdrew from the country. That has already boosted local car sales.

Mr Tanner has now declared that the government will not stand idly by, in the weeks and months ahead, as thousands of commercial construction industry jobs are lost, because of an avoidable blip in that industry’s underlying finances.

January 21 will be remembered in Australia for more than Barack Obama’s inauguration as the 44th US President.

It was also the day that the first large scale retrenchments of the global economic crisis hit Australia.

The mining giant, BHP-Billiton announced that it would put off 6,000 jobs world-wide, including 3,300 in Australia.

The Treasurer, Wayne Swan, said:”What we’ve seen today is a sober reminder of the unwinding of the mining boom.”

The repercussions of these – and thousands of other job cuts to come – will be enormous.

As we have said before, most Australian families are not well prepared for the sudden collapse  that has now hit the national economy.

Debts are high and savings are low.

Thzt’s what happens when families struggle to get homes in property booms, while house prices, interest rates and petrol prices are sky high.

The Reserve Bank knows all this only too well.

It reports, for example, that the average Australian family’s housing debt to housing asset ratio stood at 28.9 per cent last September, when the global economic crisis struck. That was up from just 8.8 per cent, a generation ago, in 1977.

The miners, who have just been put retrenched, have a big stake in all this.

Many years ago, when the Pilbara iron ore operations were still in their infancy -and your correspondent was industrial reporter on a West Australian newspaper – a big miner, which will remain nameless, invited him to lunch more than once, to meet  its Japanese buyers.

After some polite lunchtime conversation, the buyers would always ask the same question.  “Are there Communists in the Pilbara?”

The question was understandable. The miners did go on strike, quite often, back then.

But I would reply, quite honestly that they weren’t.  “They are all little capitalists, who have gone north hoping to save for a deposit on a house,” I would explain.  “But when they get there, they work very long hours, in extreme heat and often get grumpy and unreasonable.”

The hours have been reduced since then.  And their working conditionsnow are much more reasonable.

But most young miners are still hoping to save for – or pay off a house – somewhere in the suburbs.

Those who  have just been sacked must now revise their plans, urgently.

But the trouble won’t stop there.

Indeed,  the second-round impact of these – and future – sackings will be  very dangerous, not only for those directly involved, but for Australia’s banks and the entire economy, as well.

House prices could collapse here, too, as they have in America, if too many houses are repossessed and put up for resale on a bad market.

People who are out of work don’t pay taxes, either.

But they do claim unemployment benefits.

So the Federal government, too,  stands to lose heavily out of all this.

It will take more than just a few Federal deficits to correct this grim situation.

The Prime Minster Kevin Rudd is signalling extra help for  Australia’s credit markets.

“We will continue to work in partnership with the private sector to do what we can to support Australia’s credit markets.” he said in Adelaide last night.

Mr Rudd said the government had already developed “a special purpose” credit vehicle to assist the car industry.

It did that after foreign financiers left the country.

He said, too, that Australia’s banks are still finding it difficult to raise funds overseas, as a result of the global credit crisis. And  the credit they can get is expensive.

“For example, the banks’ cost of obtaining real credit remains double what it was in early September,” Mr Rudd said.

“The withdrawal of foreign bank lending, the tightening in domestic bank lending and the dramatic falls in stock markets are all hurting the real economy,” the Prime Minister said.

He said there had been a sharp downturn in the growth in business debt in Australia.

“When business cannot get loans and are not confident about the future they can’t, or won’t invest.”

And that meant they can’t create jobs and can’t grow.

“The supply of credit affects real busines and affects real jobs,” Mr Rudd said.

He gave no indication, though, of either when the boost would be delivered or how big it would be.

A small business organisation says Australia’s banks are not playing their part in preventing job losses, in the face of the global financial crisis.

Peter Strong, general manager  of the Council of Small Business Organisations of Australia, said the government had done much to support the banks  against the crisis.

And that help had been given on the understanding that the banks, in turn, would help support the job market, Mr Strong said.

But this is not  happening.

Instead, banks are charging their small business customers up to 3 per cent more than they charge home buyers and consumers, he said.

Mr Strong  said that is making it difficult for small business owners to keep their staff.

And, collectively, the small business sector is Australia’s biggest employer,  he added.

“Without the rate cuts, there will be higher numbers of retrenchments,” Mr Strong warned.

He said the Deputy Prime Minister, Julia Gillard, had been urging business people to take a responsible attitude on staffing levels.

“Perhaps she should ask the banks to also take a responsible attitude, ” Mr Strong said.

“Or perhaps force them, through legislation,  to provide small business with the rate cuts they need.”

“The banks cannot have it both ways,” Mr Strong said.

At present, he said, they are taking protection from the government, but offering nothing in return.

We can expect another rate cut soon, but there is propably no new Federal stimulatory package in Australia’s immediate future.

Both the Prime Minister, Kevin Rudd and the Treasurer, Wayne Swan, admitted yesterday that the global economic crisis will hit Australia hard.

Mr Rudd told an Australia Day  reception at Kirribilli House in Sydney that the size of the global crisis “almost beggars belief.”

“The impact will be big,” he said.

“But so will our response.”

And Mr Swan hit Australia’s airwaves, to reassure the public after Acess Economics reported that the crisis had “buggered” the Federal budget.

But Swan’s message, too, was grim.

“We are certainly not immune from the impact of a slowing world economy,” he said.

However it was measured, too.

“…we’ll look at all this evidence as it comes through and respond in a timely way,” he said

Mr Swan had already said that the Federal government “will not hesitate” to take further action to support growth and protect jobs.

“There’s no point in gilding the lily in any way,” Swan said.

“We will not hesitate to take further action if necessary to support growth and limit the impact on
Australian jobs.

Access said the Chinese economy had been more seriously affected by the global economic downturn than it had expected.

Mr Swan had said earlier that the Federal government is pausing to assess the impact of its economic stimulus package.

“We’ve got some time yet to make assessments about the impact of the economic security strategy,” he said then.

He  also said, just a few days ago,  that he had no plans to bring forward tax cuts that are due in July.

However he said  all options to sustain jobs would remain open.

Swan said, though, that he would not be making daily comments on the package, as new data becomes available.

Allthough Australia’s unemployment rate rose only slightly, to 4.5 per cent, last week  another cut in Australia’s still relatively high interest rates, is likely next month.

The Opposition Leader, Malcolm Turnbull, is  pressuring the government yesterday to bring forward the tax cuts that it has slated for July.

“We argued last year that the tax cuts should be brought forward,” he said.

Cut lunches are back -  as cash-strapped parents hunt for ways to brace their budgets.

The global economic crisis, which has cut working hours and increased unemployment, has seen to that.

Many parents, now, are struggling to meet ordinary education expenses.

So if  Dad has to take a cut lunch to work – and the kids have to take their lunches to school – instead of buying them at the canteen or the local shop, then that’s just what needs now dictate.

But the weather is still hot – for most Australians – and there are risks.

Those risks will persist, too, when the kids go back to school after their summer holidays.

So what can be done, to make sure that the cut lunches you make are safe?

The Food Safety Information Council has some handy hints.

“Lunches can safely be prepared ahead of time,” the Council’s chairman, Dr Michael Eyles said.

But he added a proviso.

“Provided they are kept in the fridge or frozen.”

“Always practice scrupulous handwashing,” Dr Eyles added.

Ensure that everything which touches the lunches is kept scrupulously clean.

Lunches should be kept cool, too, Dr Eyles said.

“Pack something cold, such as a frozen juice box or water,” he adds.

So all this sounds routine.

Well, so it should.

But remember that food poisoning causes 120 deaths and 1.2 million visits to the doctor each year in Australia, Dr Eyles warns.

Thousands of Australian pensioners will have a little extra money in their pockets and purses soon.

That’s because the Federal government is adjusting a deeming rate, to reflect lower interest rates.

The changes, which will apply from January 26, were announced by the Acting Minister for Families, Housing, Community Services and Indigeneous Affairs, Tania Plibersek.

The so-called upper deeming rate will be cut from 5 to 4 per cent from that day.

This applies to investments above $41,000 for single pensioners and $68,200 for pensioner couples.

The reduction will – effectively – increase the amount of pension payments made to thousands of Australians who have substantial private investments.

Ms Plibersek said the change will affect many people who receive means tested pensions.

Age pensioners, people on Disability Support Pensions, Carer Payments, Veteran Service Pensions and income support allowances and supplements will be eligible.

These include the Parenting Payment and Newstart allowances paid by Centrelink and the Department of Veterans’ Affairs.

Ms Plibersek said the government would continue to take decisive action to uphold the integrity and fairness of the social security system, in the face of on-going events in financial markets and the wider economy.

A margin loan can be very useful if you understand it thoroughly and deal with a reputable lender.

But there are risks with this kind of borrowing.

Margin loans can deliver better returns on your investments.

But they can also magnify your losses.

And the Federal government believes there have been abuses, in margin lending.

It wants that reduced.

That’s why the Minister for Superannuation and Corporate Law, Nick Sherry, announced new measures at the weekend.

Senator Sherry says the Federal government’s Financial Services Working Group will begin consultations with banks and other lenders this week, on a new, national regulatory regime for margin lending.

He says this will include new, short form,  plain English product disclosure documents.

This will be a tricky exercise in plain writing , because margin lending is a complex area.

But a well informed borrower is also a well protected one.

And that is what Senator Sherry hopes to achieve.

“There will be single, standard, national regulation and supervision of margin lending by July 1, 2009,” he says.

That’s a bold declaration.

But Senator Sherry says it will mean much greater protection for investors and cost savings for lenders.

But margin lenders will have to be licensed under the new regime.

And the Australian Securities and Investments Commission will be watching to see that their representatives are properly trained.