Swine Flu on Swivel

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I have now uploaded the swine flu data to a Swivel data set. I will update this data set periodically and so the rankings in the chart below should stay reasonably up to date.

Data sources: Guardian Data Blog, CIA World Fact Book.

UPDATE: A number of people have told me that in a number of places, including Victoria and much of the US, testing for swine flu has ceased. This means that the “lab confirmed” swine flu count will become increasingly meaningless over time, so I have decided to stop updating this data.

Swine Flu League Table

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The Guardian have been publishing swine flu data on their Data Blog. They are sourcing their data from by the World Health Organisation, the US Centers for Disease Control, country health agencies and press reports, which makes their data the most up to date I have found. One thing missing from their data is a sense of scale for each country. Of course populous countries like the US have had a high number of infections, but this also means that hidden in the smaller numbers are some fairly significant infection rates in countries with smaller national populations.

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Where Music Lives

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Over the last few years, I have posted a number of times on the subject of music. These posts have ranged from the subject of Krautrock to a critique of the RIAA. From now on, I have decided to post pieces which are directly about music (concert reviews, genres, etc) over on The Music Blogs, where I am now a guest contributor. Anything about the economics of music or music and web 2.0 may continue to appear here on the Mule.

I have begun this shift with a review of the Lee “Scratch” Perry concert at the Sydney Opera House. Perry, one of the pioneers of dub music, is now 73 so it was a historic occasion, not to be missed. It was a great concert and featured the legendary Adrian Sherwood on the mixing desk, but that’s as much as I’ll say here. To find out more, you’ll have to read the review!

Restaurant Hall of Shame

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Last week the New South Wales Food Authority began publishing details of penalty notices issued to food outlets around the state. Their media release included examples of the sorts of tasteful details included in the reports:

– KFC in Victoria Street, Taree fined $660 for having an accumulation of dirt and grease in the shop.
– A noodle takeaway in Teramby Road, Nelson Bay received two fines for $330 each for having a dirty shop.
– An outlet in Great Western Highway, Marrangaroo (Lithgow) fined $330 for not maintaining a required standard of cleanliness.
– A noodle shop in Salamander Bay fined $660 for having evidence of cockroach activity in the shop.

The data stretches back to November 2007 and consists to date of 1038 penalty notices. Data sets like these are a delight to data-miners like myself and so I plan to define a data-scraping tool along the lines of the one I developed to capture Grocery Choice data (speaking of which, it is probably time for an update on grocery prices on the Mule). In the meantime, I have my hands on details of 1000 of the 1038 and have conducted some intial exploration of the data.

First there is the suburb hall of shame. The table below shows the 15 worst suburbs ranked by number of penalty notices. The inner West Sydney suburb of Ashfield has the ignominious award of first place, with 33 penalty notices. These include a number of repeat offences, including five notices for the Eaton Chinese Restaurant for offences including storing food in the rear yard and failing to provide hand-washing facilities. See them all here (note that this search includes a few Summer Hill restuarants).

Having recently moved to Petersham, I was gratified to see that neither Petersham nor Leichhardt have yet blotted their copybooks burnt their toast*. The Mayor of Newtown should be pleased to see that Newtown has only one penalty notice for the Tandoori Grill.

Rank	Suburb	Penalty Notices
1	Ashfield	33
2	St Mary’s	31
3	Penrith	29
=4	Castle Hill	27
=4	Sydney	27
6	Auburn	18
=7	Burwood	17
=7	Randwick	17
=8	Chatswood	16
=8	Fairfield	16
=8	Katoomba	16
9	Kogarah	15
10	Brookvale	14
11	Taree	13
12	Baulkham Hills	12

It is also interesting to see the outlets that have incurred the most infringements. Domino’s Pizza has been served with 14 notices across Castle Hill, Five Dock, Katoomba, Merrylands, St Mary’s (five notices there!) and Ballina, while the Asian fast food outlet Hokka Hokka has received 11 notices across Brookvale, Castle Hill, Chatswood, North Sydney, Sydney and Warriewood. Other offenders, all with 8 notices, are Zisti & Co in Alexandria, Top Choice BBQ Restaurant in Burwood and Blue Sky Chinese Restaurant in Springwood.

This is a subject that the Mule will certainly have to revisit. In the meantime, I will leave you with the penalty notice for Zhen Zhen Van Loi Hot Bread in Ballina, which is the inspiration for the picture above:

A person must not sell food that is unsuitable – A loaf of bread sold contained a cockroach.

Photo credit: kronicred on flickr (Creative Commons)

* The choice of language is an attempt to appease commenters who hate clichés.

Oil Prices on the Rise?

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Prompted by an article entitled “Bust and Boom” in the current issue of The Economist, I have decided it is time to dust off a Stubborn Mule staple: the petrol price model. As The Economist notes, following last year’s precipitous fall, oil prices have been climing again over the last few months. The West Texas Intermediate oil price per barrel (bbl) has almost doubled in US dollar terms and, despite a stronger Australian dollar, the price in Austalian dollars is not far behind.

wti

West Texas Intermediate Oil Prices

Rising oil prices may seem odd in a world economy still under the influence of the Global Financial Crisis (aka the GFC), but The Economist points the finger at the collapse in investment in oil exploration and development of new fields. This raises the fear that, while oil inventories are currently in record excess, once these inventories are drained, digging up more oil is getting harder and, consequently more expensive.

So where does this leave Sydney motorists? The simple regression model I have used before is still showing a tight relationship between wholesale oil prices (in this case refined Singapore 97 oil prices) and prices at the bowser. If The Economist’s fears are justified, petrol prices will be reaching $1.30/L very soon and will be headed north from there. Updated Petrol Model

Data source: Bloomberg and the Australian Automobile Association.

Pinching Debt Data

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Regular readers of the Mule will know that I am a bit of a data-mining junkie. Whenever I come across an interesting chart I start Googling for the underlying data. But, even with well-honed Google skills, it’s not always possible to find the data. Sometimes it is simply not publically available. I ran into just this problem recently. The recent Australian Federal budget triggered countless alarmist opinion pieces despairing that Australia would be “mired in debt” and this prompted me to do some research of my own. In the process, I came across a handy primer on the subject entitled “A history of public debt in Australia”. Written by a number of Australian Treasury employees in the Budget Policy Division, it included the chart below which shows the history of net Government debt (combining Commonwealth and State debt) over almost 40 years. The chart also includes forecasts for the next few years.

Debt History - Original (v2)

Australian Government Net Debt to Gross Domestic Product

While the paper is clearly quite recent (it has no publication date), the forecasts pre-date those included in the May budget, so I was interested in updating the chart with the latest Treasury forecasts. The underlying data does not appear to be published online and, since I do not work with the authors in the Budget Policy Division, I had to resort to special measures. I turned to a handy (and free, open source) little piece of software I have used a number of times to pinch data from charts. The software is called Engauge Digitizer and it allows you to import an image of a chart and extract the underlying data.

Engauge Digitizer Screenshot

For charts with points or curve segments, Engauge generally does a great job of automatically finding the data. For a column chart like the one I had found, the process is a little bit more manual, but with a bit of clicking on the tips of each of the columns in the image, I had my data. The chart below shows the data I obtained. One indication of the accuracy of the results is that the authors of the history paper noted that net debt had averaged 5.7% of gross domestic product (GDP) since 1970. Satisfyingly, the average of my extracted data over this period was also 5.7%.

Australian Government Net Debt to GDP (imported data)

Having obtained the data, I was then able to replace the forecasts with the more recent Treasury figures included in Budget Paper No. 1.

Debt History - New Forecasts (v2)

Australian Government Net Debt to GDP (updated forecasts)

For the alarmists who are worried about this growing debt, it is useful to put these forecasts in a global perspective. The chart below puts these Treasury forecasts alongside IMF forecasts for a number of other developed countries.

World Debt Forecasts

Global Debt to GDP Forecasts

Compared to the rest of the developed world, the global financial crisis is still not looking quite so scary for Australia. When it comes to the United Kingdom, rating agency Standard and Poor’s is even more pessimistic than the IMF and is concerned that their net debt could reach 100% of GDP and have accordingly changed the credit rating outlook for the UK to negative.

UPDATE: For anyone interested in getting hold of the data without resorting to scraping it from the images, I have uploaded it to Swivel. This dataset includes the most recent Treasury forecasts.

Blip.fm Wobbling?

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Last year I wrote about the the music/social network combination blip.fm. That post was followed up with one on the demise of muxtape and mixwit in which I said “I hope that blip.fm does not become the next victim of the RIAA”. While blip.fm has survived to date, it may only last by significantly changing its laissez-faire approach to streaming music.

A post on their blog last week opens

In the past few weeks we’ve had to make a few difficult decisions that will change the way some things work on Blip.fm. For the majority of you the changes will be for the better, for others they might be less than ideal for the time being.

It goes on to note that music will “primarily” be sourced from the music service imeem rather than broad-based searches of the internet. Users will no longer be able to submit urls pointing to mp3s. Instead, a set of “approved” urls will be used.

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Shoots Are Greener in Australia?

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The phrase de jour (or du mois in fact) in financial markets is “green shoots”. Optimists, world equity markets included, are seeing tentative signs of improvement in the world economy. Google trends saw a blip in searches for the phrase green shoots back in January when UK Government minister Baroness Vadera used the phrase and was lampooned for what was perceived as premature optimism. Moving forward a few months and searches have surged again, but this time consensus seems to be far more supportive of a positive outlook.

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Dubai Perspectives

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dubai-small I’m hoping to try something a little bit different here on the Stubborn Mule: a guest post.

But first some background. Recently I came across this article in the Independent exploring the “dark side” of Dubai. It paints a very grim picture of massive crumbling developments, environmental degredation, Western ex-pats who either revel in luxury or are thrown into debtors prison and a society built on the backs of an immigrant sub-class of near slaves. I know very little about Dubai, or the rest of the United Arab Emirates (UAE) for that matter, but found the article a compelling read. So, as usual, I shared the link with my social networks on twitter* and Facebook. This drew an immediate response from a friend who has lived in the UAE who thought it painted a very distorted picture of Dubai. So, I have offered her a guest spot here on the Mule to present an alternative perspective.

So, with any luck you’ll be reading the first guest post here very soon.

UPDATE: the article is written, but waiting on clearance. Fingers crossed!

FURTHER UPDATE: sad to say it looks as though the piece is not going to see the light of day. My guest poster’s employer has ruled out any scope for publishing the piece, even if it is done anonymously. It was to have given a more positive picture of Dubai, but the experience suggests to me that on the score of openness at least, Dubai does not do well!

* In fact, I suspect that I came across the article on twitter in the first place.

Who is to Blame for BrisConnections?

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Bolton as The Dude In the latest instalment of the ongoing debacle that is BrisConnections, Nicholas Bolton shrugged off the mantle of hero to mum and dad shareholders in exchange for a secretly arranged $4.5 million dollars. I have to admit I would have enjoyed the Schadenfreude of seeing Bolton continue to stick it to Macquarie Bank, but whatever his shortcomings (which include a striking resemblance to the One.Tel dude—thanks to the friend who pointed this out to me and to Crikey!), and however tempting it is to blame him for not finishing the job, it was never his job to protect shareholders.

When it comes to assigning blame, it should fall fair and square on the ASX. If they were doing their job properly, they should never have allowed BrisConnections to be listed in the first place.

To explain why requires a (relatively) brief explanation of instalment receipts. Also known as partly paid shares, they are a means a of issuing shares in a company in stages. If a company was estimated to be worth around $200 million, rather than issuing 100 million shares at $2 each, this approach involves selling 100 million “instalment receipts” (rather than fully paid shares) at $1 each. At some point in the future, holders of these receipts would pay a further $1 and their receipts convert into ordinary shares. This means of raising capital is very well suited to construction projects where the company does not require all of the capital upfront and was, for example, used to finance the construction of the Sydney Olypmic Stadium prior to the 2000 Olympics.

So, using instalment receipts was a natural approach to raising capital for the construction of Brisbane’s Airport Link. However, there is a crucial difference between the approach Macquarie Bank used with BrisConnections and most previous projects such as the Olympic Stadium and the Telstra privatisation. In the earlier examples, payment of later instalments was optional. Holders of instalment receipts had the choice of paying the next instalment and converting their holdings to fully paid shares or simply walking away with nothing. However, in the case of BrisConnections, paying the instalment is not optional and this makes a big difference.

To see why, I’ll go back to the hypothetical example of the $200 million company. Imagine that, for some reason (project problems, global financial crisis, or whatever), the value of the company fell to $150 million and then to $100 million and finally to $60 million. If they had originally raised capital by issuing 100 million $2 shares, then the share price would fall to $1.50, then to $1 and finally to $0.60. Obviously investors would be disappointed to see their investment fall in value, but these things happen on the share market.

Now imagine that they had issued 100 million $1 instalment receipts with a compulsory instalment payment of $1 in the future. So, even though the original investors had only invested $1, they had effectively committed $2. Initially worth $1, these instalment receipts would fall in value to around $0.50 when the company fell to $150 million. This is because the overall value of a fully paid share is $1.50 and instalment receipt holders have committed to paying the final $1, so the balance is $0.50. It gets messier as the value of the company continues to fall. When the company is worth $100 million, the instalment receipts are essentially worth $0 and with the company worth $60 million they should be worth negative $0.40! What this means is that a holder of one of these receipts should be prepared to pay someone $0.40 per receipt to take them off their hands. Since a “buyer” of the receipts considers the company to be worth $0.60 per share but knows there is a commitment to pay $1, they would want to be compensated $0.40 per share to take on the commitment of paying the instalment.

This is where is gets problematic for the ASX. The way the stock exchange system is set up, it is impossible to trade on the exchange with negative prices. So, even though these hypothetical receipts have a negative value, they would have to trade at a positive price. And they are not worth that! This is exactly what happened with BrisConnections. It got to the point where it was trading at price of a fraction of a cent when the value of the instalments were in fact negative. As a result, investors unaware of the future instalment obligation thought they were snapping up large numbers of shares at a bargain price and instead are now faced with enormous liabilities that many will simply be unable to pay.

The ASX has responded by announcing new rules requiring better disclosure from brokers. This misses the point. No amount of disclosure will change the fact that BrisConnections instalments could not be traded at real, negative prices. Even if everyone had full disclosure and (assuming no-one was trying anything tricky like Bolton) so no-one bought any units at near zero prices, this would leave the problem that existing investors would be unable to sell their holdings at all.

When the BrisConnections receipts were first listed, everyone might have expected the value of the company to go up not down, but the possibility that it could have gone down was always there and this should have raised alarm bells with the ASX right from the start.

Put simply, if the ASX cannot cope with negative prices, they should never allow anything to be listed on the exchange that has the slightest chance of having a negative value.

Since instalment receipts are hardly new, why has this only come up now? The secret lies in the fact that the instalments for Telstra, the Olympic Stadium and so many others were optional. Since there would never be a committed liability for instalment holders, the prices of the receipts could certainly go down to very close to zero, but they could never be negative. Of course, if no-one paid the instalment this would create some difficulties for the company and they would have to raise fresh capital, but a debacle like BrisConnections could never happen. Why was BrisConnections structured with a committed instalment? I can only guess the certainty of future cashflows for BrisConnections made it much easier for Macquarie Bank to pull out fatter fees for structuring the deal in the first place, which is why I would not have been sorry to see it all collapse for them (and it still might). Even if I am right in my suspicions, this would hardly be surprising news about Macquarie. So, I don’t really blame them, I blame the ASX.