28 May 2007

Dikkii's financial tips #4: A case study in banking

Welcome to Dikkii's financial tips.

This is a series where I attempt to provide some sort of guidance to financial matters without breaching the Corporations Act by actually providing advice.

Today, we're going to conclude our discussion on bank fees by giving you some idea of the kind of banking undertaken by one who is hell-bent on reducing their fees.

Namely, me.

I will point out at this juncture that I may not be a good role model for your personal banking needs - I will admit from the outset that I have more accounts than I need. But the idea that I'm trying to convey is this: by looking at the fine print, you can save a heap of money on your personal banking, and make life easier for you.

To put that another way, it is up to you to work out what your personal banking needs require - mine may totally not reflect yours. I am not saying that this is a good strategy - even though it works for me.

I will also limit my discussion to deposit accounts. Where necessary, I may discuss lending accounts, but this will, by and large, be limited to their relevancy.

Also, I will use terminology which I introduced in Dikkii's financial tips #2: Why are there so many different accounts? and Dikkii's financial tips #3: How do I reduce my bank fees? so click here for explanation of account and fee types, respectively.

Lastly, thank goodness that bank fees are all over. There's heaps more interesting stuff in this big, wide, financial world.

So on to the case study.

1. Transaction accounts

I have two of these. One of them, I don't need, but I'll discuss that later.

The main one is with a big four bank.

I choose to have my main transaction account with a big four bank, because I value convenience. This particular big four bank has one of Australia's largest network of ATMs, which I find particularly useful.

Normally, this account is subject to an account keeping fee of $5 per month, and allows unlimited EFTPOS, ATM, phone, internet and over the counter withdrawals. If you use another bank's ATMs, there is a fee of $1.50 per use.

I pay no account keeping fee for the use of this account, because I own enough shares in the bank to give me an exemption.

This account is a joint account which I share with my wife. While she is good about using just the ATMs that the bank provides, I'm not so disciplined. We usually pay about $3 per month in other bank ATM fees, and this is totally avoidable. Mea culpa, I'm afraid.

Our account has never been overdrawn, ever. This is because, we always leave a small amount, about $20 in our account at the end of each week.

Our transaction account will usually only have enough cash in it for our weekly cash requirements. Plus the aforementioned margin of $20 which is purely there for any fees at the end of the month.

My other transaction account has a balance of about $2 in it, and hasn't been used in over two years. It is with a credit union, and only exists because I have an unsecured (and reuseable) line of credit with the credit union that I also haven't used in two years.

I keep the unsecured line of credit for emergencies, but the last time I used it was to transfer $1 into the credit union transaction account, which I promptly transferred back into the line of credit again. Just to keep it available.

No account keeping fee is charged on my credit union accounts, and no transaction fees are charged, unless I have cash access. I only have phone and internet access, so I'm charged nothing.

Total fees on transaction accounts = $3 per month, if that.

2. Cash management accounts

I do have one of these. And it's with another big four bank entirely.

Now I don't actually use this account much at all. I got this account initially because my online stockbroker, which is owned by the big four bank from the previous paragraph will give me a fantastic discount on trades for having one of these, and settling my trades through it.

To make it difficult, the account in question needs to be opened with a minimum of $5,000 and only pays interest on balances above this figure, but I only trade about once every couple of months, if that.

So the day after the account was opened, I transferred the money I opened the account up with straight out and back into the online account it had come from. The account would be lucky to have any more than $2 in it at any one time, and I only use it to settle trades and pay my margin loan repayments (direct debit).

It is account keeping fee exempt, and comes with a maximum of 15 electronic transactions, including direct debits for trades and margin loan repayments. Naturally, I'm unlikely to be breaching this at all, so no fees here.

Total fees on cash management accounts = $0

3. Online accounts

I have two of these - one is a joint account which I share with my wife and is with the same institution that our joint transaction account is with. This is where we keep our (admittedly small) "slush fund". The joint transaction account is the nominated account.

The other is in my name and is with yet another institution again. This account is kept to store the funds required to service my margin loan. The nominated account for this is my cash management account.

Most of my salary is directly credited into our joint online account, with a small portion credited to my personal online account. My personal online account also receives the odd credit from dividends and managed fund distributions.

Money from the joint online account is "drip fed" in weekly instalments into our joint transaction account for weekly cash requirements. This is excellent for budgeting.

On top of that, a small portion is transferred from our online account to our transaction account in monthly instalments for bills such as rent and credit card payments.

Money from my personal online account is mainly fed monthly to my cash management account to service my margin loan repayments.

Like most online accounts, these charge no account keeping fees or transaction fees. They also pay a high rate of interest - while they may not be the greatest interest rates on the market, I have absolutely no intention of chopping and changing online accounts just to chase rates - I don't have enough cash to make this a worthwhile exercise.

It would just be a few basis points of interest anyway.

But I still pool money in them - with the exception of one bank's ludicrously humiliating offer, online accounts usually pay a high rate of interest from $1 balances upwards.

Total fees on online accounts = $0

4. Interest

All this time, I have discussed fees, and haven't really broached the subject of interest.

Given the way bank accounts work at the moment, I choose to have as much of my (and my wife's) money in our online accounts at any one time. This ensures that maximum interest is paid and that we only have funds that we need for cash purposes in our transaction account.

We get paid into our online accounts. There the money stays until we need it. Using this strategy with credit cards means further fee saving and interest maximising opportunities, but I'll leave that until I discuss credit cards more.

You can even have more fun rorting the banks with your home loan, but I'll leave that until another day as well.

All in all, I think I do pretty well - I count a total of about $3 per month in fees, all of which can be avoided if I was a bit more disciplined.

You can probably do it with a little more finesse than what I've done it. You just need to know your account types and know your fees. Knowing your interest rates should be the last step.

Lastly, be creative - banks rely on people doing things the same way. If you do it differently, you can consider yourself in front of the game. It's that easy.

Dikkii's financial tips index

Standard but necessary disclaimer: This is not advice. Only a complete idiot would think that any of this constituted advice. It's not even vaguely reasonable to consider this to be advice. If you are in any doubt as to the content of this, see a good, independent financial adviser immediately. They do exist.

26 May 2007

National Day of Secularism

National Day of Secularism
May the 26th

Welcome one and all, to Australia's first National Day of Secularism.

Planned for today is a number of events designed to show one and all that Australia is the warm and tolerant place that we all know and love.

There'll be fun for young and old as we show all and sundry that we love and value every point of view, but none more so than the 13th commandment:

Thou shalt not impose thy religious view upon thy brother or sister. (Cyril 13:13)

Starting this morning will be morning teas all around the nation. In Melbourne, the party starts in Fitzroy Gardens, as Premier Steve Bracks operates the tea trolley himself, bringing steaming cups of Darjeeling round for all the punters to drink with their bacon and egg rolls or their spinach croissants. After which, Mr Bracks plans to say a few words where he gives thanks to our religious brothers and sisters for obeying the injunction against proselytising that was handed down in the High Court, only yesterday.

After this, there will be activities for all the kids, including the world's biggest jumping castle. Lord Mayor John So has told us that he plans to get his shoes off and show the rest of Australia why he's known as Jumping Johnny.

In Sydney, there will be a concert on the Opera House forecourt featuring Powderfinger, Midnight Oil and a re-united Redgum. Prime Minister John Howard will motor over the water from Kirribilli House to say a few words, climaxing with why courting the Hillsong vote was a silly idea, and apologising to Aboriginal Australia for past injustices. He also plans to mention that the Dreaming is every bit as valid a religious philosophy as those imported from around the world.

A highlight of this gig will naturally be the PM, current Labor MP Peter Garrett and former card carrying Democrat John Schumann pictured together laughing and telling stories about their kids.

In Brisbane today, there will be a series of speakers at a function in Southbank praising the Fathers of Federation for their foresight in the inclusion of Section 116 in our nation's constitution:

The Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion, and no religious test shall be required as a qualification for any office or public trust under the Commonwealth.

Kevin Rudd, the Opposition Leader will use this opportunity to announce to the rest of Australia he will actively campaign to ensure that Christmas is renamed "Midsummer", Easter is moved to June and relabelled "Midwinter", as well as adding the following holidays to the Australian public holiday roster:

  • UNESCO World science day - 10 November
  • International cannabis day - 20 April
  • International talk like a pirate day - 19 September
  • Pi day - 14 March
  • Pi approximation day - 22 July
  • No pants day - First friday in May

This is expected to be wildly popular, so get there early, folks.

Finally, there will be a free concert in Canberra on the slope leading up to Parliament House.

The night will culminate in merriment when Mufti of Australia, Sheik Taj El Din al-Hilaly and the Archbishop of Sydney, Cardinal George Pell drop their strides and dance the Eagle Rock.

Head of World Vision Australia, Rev Tim Costello promises to use the proceeds of the oversized novelty cheque that he receives for good and not for proselytising purposes.

What a shame none of this will really happen.

In reality, 26 May has been labelled the National Day of Thanksgiving by a group who appear to think that it should be co-opted by all and sundry as a "National Day of Thanksgiving". This National Day of Secularism blogfest is one way to protest this.

This group's agenda is up for all to see at their website and it should be clear from their "vision" that there is nothing secular about this group's agenda:

The concept of a National Day of Thanksgiving was in the hearts of many Australians for a number of years. Many people wrote to the Australian Prayer Network expressing a desire to see our nation called to prayer one day each year to acknowledge our Christian heritage and the Lordship of Jesus Christ over our nation.

The Australian Prayer Network took such thoughts and dreams to other national prayer and ministry organizations and church leaders. They received overwhelming encouragement to pursue the concept. The decision to proceed with a National Day of Thanksgiving was confirmed at a meeting of National ministry leaders at Parliament House Canberra on the 17th June 2003. They voted unanimously to support the Australian Prayer Network in their initiative. It was decided to hold a National Day of Thanksgiving on the Saturday of Pentecost weekend each year and to seek to have the day included in our national calendar.

It's interesting to note that they've got a spot where you can leave your "testimony" for all to see. I've testified that this is one step towards a theocracy that I didn't want to see our nation take.

But given that it's heavily moderated, I doubt that it'll ever be seen.

24 May 2007

Blog against theocracy - National Day of Secularism - 26 May 2007

National Day of Secularism
May the 26th

I have been tagged by Beep Beep, the wise sage responsible for Beep! Beep! It's Me.

How the “meme” works

This “meme” works in two steps; first the “Tagging stage” and then the “Blog against theocracy stage”. (the word "meme" incidentally, is one of the most pretentious words doing the rounds of the internet)

Tagging stage

If you are tagged by the meme, then it’s the same old format; mention this entry so people can see the rules and then tag five other bloggers (preferably Australian given the nature of the NDoT.).

Blog against theocracy stage

If you have been tagged then in addition to tagging others, it is also hoped that you will write a blog entry about the separation of Church and State in Australia. It could be a critique of Pell’s “normative democracy”, the historic anti-democracy sermonizing of Archbishop Daniel Mannix, inevitable discrimination by the funding of (approved) chaplains in public schools, the state backed imposition of bans on forbidden women’s dress or whatever Church-State issue you find important.

Preferably, such a blog entry would be published on the 26th, but there is no deadline as such. Just a couple of caveats:

1) the church-state anti-theocracy blog entry should mention the phrase “National Day of Thanksgiving”, possibly mentioning that the entry is a response to the NDoT, and
2) feel free to add the (again admittedly modest) banner.

I don't really know all that many Australian bloggers, and Beep and Plonka have already been tagged, but I will tag those I do know:

1. The Second Sight
2. Crazy World
3. Contempt

I'll have to leave the rest open.

21 May 2007

Dikkii's financial tips #3: How do I reduce my bank fees?

Welcome to Dikkii's financial tips.

This is a new series where I attempt to provide some sort of guidance to financial matters without breaching the Corporations Act by actually providing advice.

Today, we'll be looking some more at bank fees. Specifically, how to reduce them, if not avoid paying them outright.

I'm going to look specifically at deposit accounts, today. I'll do a feature on lending a little down the track, but for most of us, deposit accounts are what we start out with. In today's banking climate, it is quite appropriate that we look at deposit accounts separate to lending, because more and more people are getting their loans through mortgage brokers, and you may even end up with a loan from some organisation that doesn't even have deposit operations. Or isn't even a bank, credit union or building society, for that matter.

There are many different types of fees that you might come across in using deposit accounts. We're going to stick to the main ones. In the process, I might use terms for bank accounts that I introduced in Dikkiis financial tips #2: Why are there so many different bank accounts? and so if you get lost, please click back here for help.

So let's get started.

1. Transaction fees

For personal accounts, these are normally fees for any withdrawals that you might make.

It's interesting to note that banks reserve the right to start charging for deposits and anything else, but to do so on anything other than business accounts will be PR suicide for the first bank that tries to do this.

Transaction fees will normally be quite low for non-cash withdrawals, such as through internet and phone banking channels, a little bit higher for cash withdrawals made through ATMs or EFTPOS, a little higher again if they're through a cheque facility and then completely outrageously high if done over the counter of a bank.

The good thing about these, is that most transaction and cash management accounts appear to have a reasonable amount of "electronic" withdrawals built into them fee free - like about 15 or 20, and at some banks, you might get an unlimited supply of these. By electronic, I mean ATM, EFTPOS, internet and phone banking.

Do not accept anything less than 15 electronic withdrawals fee free on your transaction account. Go for unlimited if you can. After a few transfers and bill payments, you'll be wondering where your free transactions have ended up.

One thing important to note is that where you have any kind of direct debit arrangement in place out of your bank account, these will normally be factored into your electronic transactions total. Always check to see how direct debits are itemised in the fee scheme of things.

Be prepared to pay top dollar for cash withdrawals over the counter of a bank branch - I don't think that there's an account left that gives much in the way of exemptions for these. You can expect to pay up to $4.00 per over the counter withdrawal if you like getting your cash from a person.

Interestingly enough, online accounts don't charge transaction fees at all, as a rule. However, you can only generally withdraw out of them over the net or telephone, so this kinda makes sense. I would counsel against opening any kind of online account that charged transaction fees.

Anyway, the moral of the tale is that if you make withdrawals through your bank's network of ATMs or use the bank's phone or internet banking facilities, you will save on transaction fees. Avoid doing withdrawals over the counter or via cheque facilities.

2. Account keeping fees

This is a bitch of a fee introduced primarily to recognise the fact that accounts don't maintain themselves. Usually, these will only apply to things like transaction accounts or cash management accounts - ones where you'd expect to be quite a lot of activity.

Online accounts don't usually charge these fees - but you still need to use them with a transaction account which will.

People who will happily complain about this one strangely don't appear to mind that they'll be charged up to $50 per month for monthly land line fees, or other utilities, even though bank account keeping fees can start from as little as $2.50 per month and only go as high as $6.00 per month, usually.

These fees normally come with catches.

For example - a small account keeping fee on a transaction account may have written into the fine print that only "electronic" withdrawals are allowed, that is, only through ATMs, EFTPOS, internet and telephone banking. You would normally expect to pay hefty transaction fees if you do a withdrawal over the counter in a bank branch, or operate a cheque facility.

If these are even allowed. This blogger is aware of quite a few transaction accounts where over the counter withdrawals are expressly forbidden, except in the event that you close your account.

For larger account keeping fees, you can expect maybe up to a certain number of over the counter withdrawals being made available to you fee free - like, you know, maybe two - before being hit with transaction fees for these.

Be aware that some banks like to offer a deal whereby they will waive account keeping fees if you keep more than a minimum amount in the account. This is a con. You will not maintain the balance, and will therefore be charged.

Also the minimums are usually quite high, often in the region of $1,000 or more. Given that these accounts are normally transaction accounts which pay extremely small rates of interest - if any at all - you would be better off keeping any money that you are not using in an account that earns more interest. Avoid these kinds of deals - banks need to know that his sort of thing will not be tolerated.

Try to keep your account keeping fees to a minimum - why pay extra for the privilege of using over the counter facilities if you don't need them?

Lastly, if you are paying account keeping fees, try to reduce the number of accounts that you use. Having a separate account with a cheque facility that you rarely use is a luxury if you are paying two sets of account keeping fees. Given that most state governments in Australia have stopped charging debits tax, if you require a cheque facility so badly, have one added to your everyday transaction account. You'll have more of a clue about balances in there before you write cheques than a separate account, anyway.

3. Other bank access fees

I get asked about these fees all the time, usually from people who really should know better.

Case in point: My good buddy, whom we call "Bob" has his bank accounts with a small regional bank. As a result, he can never find an ATM of his bank's when he needs one. So he has to use other bank ATM's.

Bob could be being charged up to $3.00 per go at using a bank ATM network that his bank is not maintaining and, therefore, getting charged for using.

Bob: This sucks. Why should I get charged for this?
Me: Well, ATM networks don't just maintain themselves, you know. Why should you get free access to other bank ATMs, just because your bank isn't wealthy enough to build their own network properly?
Bob: I love my bank. They support the community.
Me: Well they're clearly not supporting your community, because in all the time that I've known you, you've never been able to find one of their ATMs.

What Bob doesn't get, is that if he wants convenience, he's going to have to trade in the "community" feel of his current provider for it. Knowing Bob, of course, he'll blame the big banks for this, and come up with some conspiracy theory that has it as a plot by the big players to wipe out the small ones. But I digress.

One thing to look out for with other bank ATM usage fees is that usually balance enquiries at other bank ATMs are often charged the same rate as a withdrawal. A great trick here is to try a withdrawal - if you have no money in your account, the withdrawal won't go through, you will get a printout showing your balance, and you (in most instances, but not all) won't get charged the non-bank ATM fee. Of course, you may end up doing a withdrawal that you didn't need to do.

My suggestion here is to take advantage of your phone banking if you just want a balance.

Another thing to look out for is that some banks will charge an electronic withdrawal fee, or have an other bank withdrawal count towards your fee free total for your electronic withdrawals, on top of getting stung for the other bank ATM fee. Ouch!

The moral of the tale is, steer clear of other bank ATMs, unless your bank has some kind of deal in place where you do not get charged for using certain other bank ATMs.

Also, cash out at EFTPOS terminals is a great way to get around using another banks ATMs. Planned well, EFTPOS is an excellent way of doing this.

4. International transactions

These can be quite pricey. I've used ATMs overseas and regretted it afterwards. Usually, you could be up for as much as $5.00 per withdrawal, so you need to make every one count. Avoiding small withdrawals is a really good suggestion.

5. Overdrawing fees and interest

Never overdraw your bank account. Borrow from family and friends if you have to and ensure that you've got enough in your account at the end of the month to cover fees.

Keep mental tabs on the transaction and other bank ATM fees you're clocking up, or keep a small notebook if you have to. You only have yourself to blame if you overdraw your account.

Most banks will let you get away with a few dollars before they start charging fees - but they won't let you get away with a debit balance for a moment before they start charging interest, sometimes up to 25% pa or more.

And never, ever enter into a direct debit arrangement if you don't know when it's going to come out of your account. This is just being irresponsible.

Overdraft facilities by prior arrangement will save you on fees - but it is rare that they'll save you on interest. My suggestion is to avoid these unless you have a good reason for needing one.

6. Fee exemptions and hints

Transaction fees can be avoided - go for an unlimited electronic transaction deal or better.

Account keeping fees can also be avoided. Most banks offer fee exemptions to customers who have their lending under the same roof. Also, relationship balances can assist here as well - one bank offers a deal whereby if you have $50,000 or more in a relationship total, you'll get your account keeping fees waived. Relationship balances is usually the absolute value of all banking balances - deposit and lending - that you have with a bank.

Another deal that some banks offer is to be a shareholder. One bank has a deal whereby if you own more than 500 shares in them, you'll get charged no account keeping or transaction fees. Nice.

Students usually enjoy fee free banking. Be warned, though. If you are a tertiary student, you will usually need to visit the bank just after the start of each calendar year to get your exemption extended for another year.

Pensioners often get to enjoy fee free banking.

Other bank ATM fees and international access fees can't usually be waived for anyone. One bank that I do know, however, doesn't have very large operations in the state where I live, so they're offering to waive all other bank ATM fees provided that you link one of their Visa debit cards to your account. That's pretty good.

One last thing - if you've been charged a fee that you think you shouldn't have been, get a bank staffer to explain it to you. If you're still not happy with their explanation, mention the words "Banking Ombudsman" and just see how fast they move in getting your fees reversed.

But anyway, that's the minefield that is bank fees, or at least a start to them.

Other fees do exist - banks these days exist to get fee income - but hopefully we've covered the basic ones.

You have to know what you're paying before you can go shopping around, but you stand to save a fortune once you do. Hopefully this post has helped you out.

Dikkii's financial tips index

Standard but necessary disclaimer: This is not advice. Only a complete idiot would think that any of this constituted advice. It's not even vaguely reasonable to consider this to be advice. If you are in any doubt as to the content of this, see a good, independent financial adviser immediately. They do exist.

18 May 2007

The late Rev. Jerry Falwell

I was going to post something about the passing of this guy, but my mother always told me that if you can't say anything nice about someone, it's better not to say anything at all.

14 May 2007

Carnival of the Godless #66

The 66th Carnival of the Godless is up at The Atheist Experience, and yours truly has got The Meaning of Life up there for all.

My attention has been taken, this time aroung by a post at Symbolic Order by Aaron Ross Powell titled, "What atheism offers: Justifying a life's purpose."

A well written post.

Also, Bob, the Austin Atheist has put this up: How Not To Persuade An Atheist #1: Bypassing the Intellect . Excellent.

Elsewhere there is plenty of stuff for all so check it out here.

Check it out here.

13 May 2007

Great debacles of our time: The failed Qantas takeover

This one was always one that had our full attention from day one. And it stands as an example of a pretty good lesson in how not to do a private equity deal.

The story goes like this - a company that is roundly considered an all-Australian icon, Qantas, is subject to a takeover, where the guys taking the company over is a small cabal of management in league with Macquarie Bank and a bunch of private equity financiers including Texas Pacific and Allco Finance Group and others.

Naturally, all the usual stuff comes out - the unions complain about possible off shoring of jobs, politicians complain in parliament about the possible loss of an all-Australian icon, staff complain about an uncertain work environment and the media lap it all up.

Anyway, institutions holding the shares refuse to sell and the whole deal falls down in a blaze of uncertainty in what was possibly the most anti-climactic end to a private equity deal yet.

Anyway, I found this whole thing amusing from start to finish. I would have found it even funnier if I didn't hold shares in Qantas and Macquarie Bank, but this was truly a debacle that ranks highly on our great debacles scale.

The first thing about this story was the degree to which management could not keep it quiet that they were going to attempt a management buy-out. Rumours abounded and bubbled around to the point where the ASX had to issue a please explain. Fortunately, by that point, the consortium funding this was ready to go public and so the deal financially came out. Not before, I'm sure, people read the newspapers and acted on the rumours which were, by that stage, smoking hot.

I'm sure that I'm not the only one who thinks that the ASX took far too long to act to get the rumours addressed. But this was funny stuff.

Anyway, the consortium's takeover attempt goes public and is embraced fully by the Qantas board after some weak attempts to show some form of neutrality. You do have to note at this point in time, and also throughout, very little disclosure has been made as to how many in management or on the board were in on this. It appears that disclosure only takes place these days when possession of the shares in the new entity takes place.

So the terms of the private equity deal are fairly attractive relative to the share price - $5.60 per share prior to a fully-franked dividend of $0.15 per share which means that the takeover offer price is $5.45 per share after the dividend is paid out.

Acceptances are slow coming. That's OK, the consortium is happy with this. They're expecting them bit by bit. But they're still confident that they'll get the required 90% acceptances to allow mandatory acquisition of the remaining shares by the cut-off date.

Meanwhile, some of the institutions are holding out. It's clear that quite a few of them do not want to sell.

One of them, Andrew Sisson from Balanced Equity Management breaks the silence that fund managers usually put up by publicly announcing that the offer by the consortium is simply not good enough.

It is clear at this stage that the bid is now in deep trouble.

It is at about this point, if memory serves me correctly, that the desperate consortium tries to pull a rabbit out of a hat. This was quite novel and really quite amazing for this type of takeover. The consortium extend their offer and says that they'll proceed with only 70% acceptances.

I found this bit hilarious - basically, they were saying that they were happy to allow 30% of the company to remain on the market.

This bit was always going to backfire for several reasons:

  • Retreating to 70% acceptances looks desperate; and
  • A new possibility for investors has emerged.

A new possibility for investors had emerged, and it was one which would have been particularly attractive to some, although admittedly not so attractive to others - investors had effectively been offered a once-in-a-lifetime entry in at the ground floor to a private equity deal involving a management buy-out.

Time was running out now.

To complicate matters, as they do, ever since the board of Qantas announced that they were approving the bid, hedge funds just could not help themselves.

Now what hedge funds do here is very simple. They go out there and, without breaching the mandatory takeover offer rules, they get their hands on as much of the company that they can, while taking advantage of the arbitrage difference between the buy price and the takeover offer price.

As a result of all the shares changing hands, Qantas, which is prevented by law from being owned by more than 49% foreign investors, is suspected to have breached this provision and it is thought that the amount of shares in the hands of overseas hedge funds may have cleared the 49% mark by a good portion.

What is also interesting to note, is that the hedge funds themselves signalled their intention for the fun and games to continue by issuing acceptances for part of their shareholdings in the hope that this activity could be stretched out. More on this later.

Anyway, hedge funds were in it up to their eyeballs and stood to make a killing should the takeover go through.

So the deadline approaches, and the consortium approaches every man and his dog on the share register attempting to get enough acceptances to enable the bid to be extended.

At the deadline, all they had to do was to get 50% acceptances, and an automatic extension of two weeks would have been added to the deadline.

It is at this point that the funniest part of this little arrangement happens.

Leading up to the deadline, it was clear that they had about 47-48% acceptances and they just needed one of the hedge funds to get on board - because it was clear that any of the Australian fund managers who were holding out would not be selling.

One of the hedge funds gives enough acceptances to get the offer over the line - but a full five hours after the offer lapses.

The bid is declared dead, but the consortium is not giving up.

Soon, after the Takeovers Panel rules that they will not be accepting this, and Qantas, and the consortium both publicly declare the bid is dead.

What emerges not long after that is a comedy of errors, as it is discovered that, if they wanted to, the consortium could have chosen to exercise a bit of fine print in the takeover offer that they appeared to be completely unaware of. This point was cut and pasted into the takeover offer at some point, and seemed pretty clear in that if a shareholder had issued a partial acceptance, the bidder could have deemed that a full acceptance had been issued.

If the bidding consortium had chosen to enforce this, this bid would be easily over the line. Of course, it should be noted that a long and costly court battle would have ensued.

Instead they chose not to.

The bid was finally dead.

The big losers from this were the hedge funds - as a result of this failed takeover, they're all having to sell their shares well into the red.

Will this takeover be resurrected? Maybe. They'd want to do it better than this, though. This was a foul-up of monumental proportions.

Disclosure: This blogger owns shares in Qantas Airways Limited and Macquarie Bank Limited.

Standard but necessary disclaimer: This is not advice. Only a complete idiot would think that any of this constituted advice. It's not even vaguely reasonable to consider this to be advice. If you are in any doubt as to the content of this, see a good, independent financial adviser immediately. They do exist.

10 May 2007

Eternal life

If you read my post on The meaning of life, then hop over to Plonka's blog, where he has posted about the concept of Eternal Life.

It kinda complements my post a little bit, and I'm a big fan of the way that Plonka can put in so much detailed goddamn research into his posts.

He is one seriously focused dude. And life-threateningly polite into the bargain.

Check it out here:

Plonka's Blog: Eternal Life

06 May 2007

The meaning of life

Hi folks. I'm not going to tell you The Meaning of Life today, instead, I'm going to talk about that age-old question:

"What is the meaning of life?"

This is a question that can, depending on what mood I'm in, either make me very irate, or very silly. In any event, it's not a question that I've ever seriously entertained myself, and I plan to discuss why, further down the page.

What does it mean? What is it all about? And what is its purpose?

I'm actually asking this about our question, and not about life, people. The question about the meaning of life is one of the slyest tools that proselytising theists like to use to ingratiate themselves onto freethinkers, and it's one that freethinkers such as atheists and agnostics prefer not to address.

But they should. This is a question that is not going to go away, no matter how hard we try, so let's have a look at it.

These days, usually whenever I hear this question, it's usually framed like this:

"Everybody thinks about the meaning of life."

I think that the presumption included within this one statement is breathtaking.

Let's have a look at some of the "leaps of faith" included within this sentence, and see if we can come to some sort of idea of what this sentence even means.

1. What do people mean, when they talk about the "meaning of life"?

This one has always confused the hell out of me. What is the meaning of life? I don't mean the meaning itself, really, I'm looking for someone to tell me about what they mean when they use this term.

I've heard a remarkably diverse number of answers on this very subject, but no one has yet been able to pinpoint a single definition that appears to have any degree of consensus.

Some answers include the following:

"What is my purpose?" - I'm uncertain of this as a possibility, as it appears to interpose a significant degree of vanity upon what is at first glance an answer about existence generally.

"Why are we here?" - This is a great example of a question that cannot be answered. If you were to ask me this, I would generally answer with the question, "If I give an answer, how are you going to prove me wrong?"

"What is our destiny?" - This is merely the first question with an attempt to remove the personal vanity. This is another great example of a question without an answer.

"For what reason are we alive?" - Finally, a question with a variety of possible answers. Personally, if this is given to me as a possible interpretation of the meaning of life question, I like to answer it with the most obvious answer there is - "A happy series of accidents involving mostly Carbon, Hydrogen and Oxygen atoms." Unfortunately, this doesn't cut it with our intrepid questioners, so we have to move on.

"What is life's purpose?" - Yet another question with no possible answer.

Now I could go on and on with this, but it would appear to be, quite frankly, silly to continue.

What we have is a potentially limitless series of questions without answers that are designed to obfuscate and dazzle the respondant into a situation where they are overwhelmed by this potentially unlimited series of questions.

A more meaningful definition of "the meaning of life" is one that encompasses all of these - and yet this has no meaning at all. Apart from the grammatical impossibility of all of these forming a single "meaning", we still have no firm definition of what this is.

This does my head in sometimes, but why would anyone design a question to have no answer?

Why not ask these questions one by one?

The answer is God. The questions of the meaning of life really have no answer, but this is not important to the theist. What the theist wants you to do is to be so overwhelmed, and so dazzled by all the implications of whatever it is that you think that the question is all about, that it is immediately plausible amongst all this confusion that God exists as a way to make sense of it all.

I call bullshit.

"The meaning of life" is a gigantic red herring that renders all other questions secondary - yet it should not. It is through consideration of what is essentially a bogus concept that proselytizing theists are allowed to push their worldview onto the rest of us, and I really wish that it would stop.

It is also, a question without meaning. Theists have been allowed to get away with this one for years - and if you allow them to ask it without pulling them up, you're not doing them any favours, either.

Put simply, the term, "meaning of life" means nothing.

2. Does everyone think about it?

There's a fair amount of anecdotal evidence that suggests that a lot of people consider this question, and we've seen from the first point that no one knows what problem it is that they're supposed to be solving, when they ponder the "meaning of life".

To be fair, we live in a world where at every possible opportunity, lots of people are prompted to think about this question. And not just by theists.

In his somewhat erroneously titled, Hitchhiker Trilogy, Douglas Adams came up with an answer to "Life, The Universe and Everything". The answer was, quite famously, 42.

Adams makes my first point pretty well, in that he made the point that the answer would make no sense until you could come up with a workable question.

In the real world, we're unlikely to come up with an answer until we've correctly formulated a question first, but it's interesting to note that the person doing the prompting of the reader to think about the meaning of life, in Adams' case, was a staunch atheist.

But in the examples we've used, the most interesting thing about them is that a third party has prompted the thinker to think about the meaning of life.

Nowhere do we have an example of someone thinking about this question unprompted.

So in this light, what do we make of the claim, oft stated by theists, that everyone thinks about the meaning of life?

It is implicit in the claim that people do this sort of thinking unprompted, however it is my view that the stats on this simply don't exist. And therefore, in the absence of hard evidence to suggest that people do think about the so-called meaning of life unprompted, the only reasonable position that we can take is that of the null hypothesis - that not everybody thinks about the meaning of life unprompted.

3. What use is the "meaning of life" question to us?

We've seen that the question itself is riddled with flaws as to its meaning, and we've seen that no one (to my knowledge) has ever produced stats that confirm that people naturally think about this question unprompted.

Our next question is about how the hell do we come up with some sort of viable use for such a question, once we have answered it?

The question, at this point in time is too vaguely worded to be of any use to us, and we simply have to accept that the utter meaninglessness of the question means that consideration of this question without any definable terms is an exercise in futility.

If it has any use at all, it is as an example of a completely useless question that should never have been asked in the first place - your archetypal unanswerable question.

Apart from this, it is inefficient to consider such questions.

4. How can God hope to provide the answers to such questions?

Theists are used to this sort of thing. No matter how ridiculously formulated a question is, if you ask it, He will be able to answer, goes the line.

Allow me to provide an excellent example:

"Ailwehfo;ihwe;ip' p owejf' eopj' wegopjwe wro[j wervg wegjo[asdoj skl;jsdv'phiasdf ojbvo?"

Believe it or not, a theist will maintain that there is an answer to this question.

Never mind that I formulated this question by just hitting keys at random, a sort of tactile version of glossolalia.

I've heard a theist, in exasperation, say, "Never mind the question: God will provide the answer."

The utter uselessness of this statement is staggering. How can God presume to answer a question that has no meaning?

And, more to the point, how can He presume that this question, to which I attach no personal relevance, will suddenly become more relevant after the answer has been provided?

Lastly, how useful would such an answer be?

No theist can seriously believe that God answers undefined and irrelevant questions that no one asked, really, do they?

And, one last point, can a theist really get away with the claim that everyone thinks about this "question" unprompted?