31 January 2009

Rudd makes political mileage out of financial crisis

Self-proclaimed economic conservative, Kevin Rudd, is economical with the truth in the explanation he gives for the global financial crisis. Rudd sanctimoniously gave his version of history in a speech last year:

Mortgage salespeople preyed on the aspirations of vulnerable families, soliciting them to take out home loans. Lenders confused working-class people, non-English-speaking families and first-time borrowers with hidden fees, ratchet interest rates and confusing repayment terms. Predatory financiers inflated borrowers' income and overstated their ability to pay back a loan.

These were the most obvious manifestations of the culture of greed and short-termism that pervaded large parts of the US financial sector. This culture was never challenged by a political and economic ideology of extreme capitalism. And this crisis bears the fingerprints of the extreme free-market ideologues who influence much of the neo-liberal economic elite, free-market ideologues who have a naive belief that unrestrained markets are always self-correcting and that markets left to themselves will always achieve optimum outcomes. Ideologues who believe that any regulation of private business is fundamentally wrong.

The truth is that it was misguided regulation rather than lack of regulation that was behind the lax lending standards which fuelled the housing bubble. The US government implemented a series of reforms that weakened lending standards with the aim of increasing home ownership among the poor and ethnic minorities. Lenders were compelled to give mortgages to borrowers on low incomes to satisfy regulations that were imposed by the Community Reinvestment Act (CRA). The government-sponsored enterprises (GSEs), namely Fannie Mae and Freddie Mac, had to meet "affordable housing goals" under the 1992 Federal Housing Enterprises Financial Safety and Soundness Act (FHEFSSA) by purchasing a certain percentage of mortgages for low and moderate income borrowers and those living in "underserved" areas.

Rudd's ideological posturing has not gone without criticism. Sinclair Davidson, Professor in the School of Economics, Finance and Marketing at RMIT and a Senior Fellow at the Institute of Public Affairs, gave his thoughts on Rudd's anti-capitalist remarks in an opinion piece that was published in The Advocate:

There really is nothing new under the sun. So too with the current financial crisis. But moralists are making hay while the sun shines. Prime Minister Kevin Rudd has blamed the financial crisis on 'extreme free market ideologues' who have 'resisted the regulation of financial markets.'

In contrast to what Kevin Rudd has argued it is a failure of regulatory capitalism. The causes of the current crisis are not 'greed and fear'; but rather the unintended consequences of do-gooders, bureaucratic intervention, and anti-capitalistic prejudice.

Rudd intends to continue with his campaign to ideologically indoctrinate Australians using the global financial crisis as an example of a failure of capitalism. While Australians are losing their jobs, Rudd has been writing a 7,000 word essay calling for greater government intervention in financial markets, even though he agrees that our financial system is among the most well regulated in the world.

IMF on the composition of stimulus packages

Contrary to the claims being made by the Federal Treasurer, the IMF is not advising against the inclusion of tax cuts in fiscal stimulus packages. The following is stated in the executive summary of an IMF staff position note titled Fiscal Policy for the Crisis:

Looking at the content of the fiscal package, in the current circumstances, spending increases, and targeted tax cuts and transfers, are likely to have the highest multipliers.

Olivier Blanchard, Economic Counsellor and Director of the Research Department, and Carlo Cottarelli, Director of the Fiscal Affairs Department, gave their views on this issue in an article published in IMFSurvey Magazine. They recommend that tax cuts be targeted at consumers who are credit constrained. Blanchard states:

Consumers who are credit constrained are likely to spend any extra money derived from a lower tax bill.

Cottarelli also mentions the importance of diversity in the composition of stimulus packages:

Given the complexity of this crisis, policymakers have to recognize that there is an unusual degree of uncertainty about the impact of specific policies. Thus, they should not put all their fiscal eggs in just one basket, and the right package probably includes a mix of different policies.

25 January 2009

Layoff trackers tally the carnage

Corporate razor gangs have been working overtime as the global slowdown takes grip on the real economy. The gravity of the crisis became clear to the world in September and October of 2008 with the collapse of many major financial institutions and the crash of the stock market, and since then many companies have moved to downsize their workforce.

The mass layoffs we are witnessing are just the beginning of the global slowdown and we can expect them to continue for quite a while. Steve Ballmer, CEO of Microsoft, which just announced cuts of 5,000 to its workforce, offered his thoughts on what lies ahead:

We're certainly in the midst of a once-in-a-lifetime set of economic conditions. The perspective I would bring is not one of recession. Rather, the economy is resetting to lower level of business and consumer spending based largely on the reduced leverage in economy.

A few pages tracking the mounting layoffs have appeared on the Web:

Layoff TrackerForbes.com
Tech layoffs: The scorecardCNET News
The Wired.Com Tech Layoff TrackerWired.Com
TechCrunch Layoff TrackerTechCrunch
Vault Layoff TrackerVault

Forbes.com is also giving a weekly layoff report:

The Weekly Layoff Report: Jan. 23, 2009
The Weekly Layoff Report: Jan. 16, 2009
The Weekly Layoff Report: Jan. 9, 2009

Recently announced mass layoffs include:

Citigroup — 52,000
Bank of America — 35,000
Circuit City — 34,000 (bankrupt)
Woolworths Group — 27,000 (under administration)
Hon Hai — 20,000
Rio Tinto — 14,000
Alcoa — 13,500
AT&T — 12,000
BT Group — 10,000
Dell — 8,900
Sony Corporation — 8,000
TDK — 8,000
BHP Billiton — 6,000
Sun Microsystems — 6,000
Intel — 5,000-6,000
Credit Suisse — 5,300
Eaton Corp — 5,200
Dow Chemical — 5,000
Ericsson — 5,000
Laird — 5,000
Microsoft — 5,000
Stora Enso — 5,000

24 January 2009

The cost for a simple meal in Zimbabwe

If you find all the doom and gloom about the world economy a bit depressing, spare a thought for the people of Zimbabwe, where inflation now runs at %11.2 million per annum, according to the CIA World Fact Book. Below is a receipt for a simple meal at a hotel in Zimbabwe, which came to a total of Z$1.2 billion.

Zimbabwe's economy lays in ruins after farms owned by whites were seized in a brutal land reform program. It now has an unemployment rate of 80% and a GDP per capita of US$200, the lowest in the world. The GDP per capita of Australia for 2008 was US$39,300.

Fact sheet: biosequestration

Fact sheet included in the Coalition's press release on its proposed Green Carbon Initiative.

What is it?

Biosequestration involves offsetting greenhouse gases by capturing and storing carbon in soil and plants. This includes restoring soil carbon through better land management; revegetation and reforestation; and biochar (converting biomass into charcoal, which can be fixed in soil).

Land Management

  • According to the Garnaut Review, 70% of Australia is arid and semi-arid rangeland degraded by marginal grazing. Garnaut estimates approximately 50% of Australia’s 2006 CO2e emissions (approximately 576 million tonnes, or Mt) could be absorbed each year for the next 20-50 years by improved practices on Australian cropping and grazing lands, and by revegetation1.
  • According to scientist Dr Christine Jones an increase of 0.5% in soil carbon on 2% of Australia’s agricultural land would absorb a volume of CO2e exceeding Australia’s 2005 emissions2.
  • Steps to improve land management include changed practices for animal management and husbandry, select breeding, grazing techniques, fodder quality, and animal shelter. Improvements would enhance animal live-weight gains and abate greenhouse gases.


  • CSIRO scientist Dr Phil Polglase estimates plantings to abate carbon emissions are profitable over 9.1M hectares of economically marginal low rainfall land at a carbon price of $20/tonne. Such plantings have potential to remove 143 Mt of CO2e each year – equal to approximately 25% of Australia’s 2006 emissions3.
  • Forestry and revegetation are already partly recognized as carbon offsets under Kyoto.


  • Created by heating biomass in the absence of oxygen - a process called pyrolysis. Half the carbon is turned into biochar (charcoal) and fixed in soil. The other half is transformed into biofuels used to generate green energy.
  • Advocates such as 2007 Australian of the Year Tim Flannery contend its widespread adoption could, over 20 years, remove the 200-250 Gt of carbon added to the atmosphere since 18504.
  • Resources firm Alumina estimates its existing pilot project5 can scale to offset 6 Mt of CO2e yearly. Alumina estimates total biochar potential of WA’s wheat belt at 25 Mt yearly, and total national potential at 100 Mt yearly – equal to approximately 17% of 2006 emissions.


Fact sheet: energy efficiency

Fact sheet included in the Coalition's press release on its proposed Green Carbon Initiative.


What is it?

Reducing energy use and greenhouse gas emissions from buildings by incorporating a variety of technologies and design features (such as passive heating/cooling) and retrofits (such as insulation).

  • According to the Green Building Council of Australia, 97% of existing Australian buildings are too old to have been built with energy efficient features1.
  • Energy-efficient buildings have been cited as a major opportunity for low-cost (and often self-funding) carbon emissions abatement by respected climate change authorities and researchers including the United Nations IPCC, the Stern Report, the Garnaut Review2, and McKinsey & Co3.
  • Globally, the IPCC found that by 2030 about 30% of global projected greenhouse gas emissions from energy use in buildings can be avoided at minimal or zero economic cost.
  • Locally, the Australian Sustainable Built Environment Council (ABSEC) estimates 27-31% of existing emissions from buildings can be abated at zero net cost - but the price signal contained in the Rudd Government’s CPRS will deliver less than one fifth this amount. ASBEC estimated by 2030 abatement of 60 Mt per year was achievable – about 11% of Australia’s 2006 emissions4.
  • McKinsey & Co estimates the Australian building sector can, by 2020, achieve emission reductions close to 50 Mt of CO2e – about 8% of 2006 emissions.
  • The Centre for International Economics estimates cuts of 39-45 Mt of CO2e can be achieved at a low cost (or net gain)5.
  • Many green retrofit options are financially self-funding over time. Estimates for the payoff horizon for retrofitting an average existing building are in the 8-11 year range.
  • Policy options to deliver gains from energy efficiency include:
    • Education campaigns to overcome information inefficiencies and alert building owners to the net economic savings from retrofits.
    • Accelerated depreciation for green retrofit expenditure.
    • Increased capital expenditure investment allowance for green capex.
    • Selective retrofit of existing government buildings.
    • Constructing new government buildings to Green Star standard.
    • Routine assessments of any regulatory burdens imposed on building owners, to ensure measures to encourage energy efficiency are not a drag on the economy.
  • The Rudd Government has failed to so far provide a $500 rebate for the installation of insulation in rental properties - 18 months after it was first promised.

1 Green Building Council of Australia, the Dollars and Sense of Green Buildings 2008, found at http://www.aela.org.au/publications/Dollars_and_Sense.pdf
2 The Garnaut Climate Change Review, found at http://www.garnautreview.org.au/index.htm
3 McKinsey & Co., An Australian Cost Curve for Greenhouse Gas Reduction, 2008 found at http://www.mckinsey.com/clientservice/ccsi/pdf/Australian_Cost_Curve_for_GHG_Reduction.pdf
4 http://www.asbec.asn.au/files/ASBEC%20CCTG%20Second%20Plank%20Report%202.0_0.pdf
5 “Building Energy Efficiency” CIE February 2008 at http://www.thecie.com.au/content/news/Final%20CIE_TPB_Perth%20(with%20animations).pdf

Coalition announces Green Carbon Initiative

Today I received a copy of the Coalition's press release on its proposed Green Carbon Initiative from Senator Mathias Cormann. A transcript of the speech delivered by Malcolm Turnbull, Leader of the Opposition, has been published on his website at the following URL:


This is a significant announcement that will put pressure on the Rudd Labor government to deliver more in its environmental policy. Many environmentally minded voters who fell for Kevin Rudd's pre-election rhetoric have been left bitterly disappointed by the Rudd Labor government's emissions targets.

Because the Coalition has delivered a superior but practical alternate policy vision, the Rudd Labor government must now justify its actions—wasting question time with irrelevant blather or giving unacceptable responses such as “this information is not publicly available” will not be good enough.



The Coalition has today committed to a sweeping climate change strategy that unlocks vast and currently untapped opportunities to abate Australia's greenhouse gas emissions.

The strategy would greatly broaden Australia's response to climate change well beyond the Rudd Government's narrow, costly and overly complex Emissions Trading Scheme. It would also deliver large gains in agricultural productivity, environmental quality and energy security.

“It is a plan that will create new jobs and new enterprises – without exporting our industries and emissions overseas,” said the Leader of the Opposition, Malcolm Turnbull.

“Our Green Carbon Initiative will ensure Australia is able to achieve greater reductions in carbon dioxide than those proposed by Mr Rudd, at relatively low cost and with enormous additional benefits to our own country's environment and productivity,” Mr Turnbull said.

“We will aim to achieve additional annual reductions of at least 150 million tonnes of carbon dioxide equivalent by 2020.”

Drawing on the advice of climate change experts from around the world, the plan focuses on three directions for abatement that have been virtually ignored by the Rudd Government:

  • A Green Carbon Initiative to offset greenhouse gases by capturing and storing large quantities of carbon in soil and vegetation – ‘biosequestration’
  • Measures to encourage improved energy efficiency in buildings, where 23% of all greenhouse gas emissions originate
  • Increased investment in new technologies to address climate change – particularly clean coal, which is vitally important to the Australian economy

The Green Carbon Initiative includes commitments to restore soil carbon through better land management; to invest heavily in the revegetation and reforestation of the Australian landscape; and to pursue sequestration of large quantities of carbon via biochar (the conversion of biomass into charcoal, which can be fixed in soil).

Measures to encourage energy efficiency in the built environment are one of the lowest-cost opportunities for abatement – and often pay for themselves. But there are many obstacles to them being realised. The Rudd Government has ignored this area, making the cost to Australian families of cutting greenhouse gas emissions higher than it should be.

More broadly, the Rudd Government, in its haste to implement its poorly designed ETS, has neglected all alternative paths to a low carbon economy. Biochar, improved land management and much revegetation activity are all excluded from the proposed ETS.

“An ETS is not an end in itself,” said Mr Turnbull. “It is only part of the solution, one tool in the climate policy tool box, and, in fact, no solution at all without new energy sources and new low emission technologies.”

The Coalition will respond to the Rudd Government's proposed ETS at a subsequent date, after receiving its own economic modelling and reviewing the detailed legislation.

24 January 2009

23 January 2009

Rumours about the future of Alcoa's Kwinana refinery

An atmosphere of gloom hangs over Alcoa's Kwinana refinery as rumours spread about the future of its alumina operations. The refinery has been in operation since 1963 and employs about a thousand personnel. The Western Australian refinery, located about 22 km south of Perth, produces about 2 million tonnes of alumina annually.

Alcoa previously announced that it will shed 15,000 jobs globally but there will be no cuts to its workforce in WA.

20 January 2009

The politics of stupidity: Cyber Safety likely to go the way of FuelWatch

The government requires the support of all 7 cross-benchers in the Senate to pass a bill opposed by the Coalition. A vote of no by any one of these senators can sink the government's bill, which puts them in a powerful position. This is how the FuelWatch scheme was killed off.

The cross-benchers are as follows:

Australian Greens Family First Party Independent

The Greens, who have described the plan as "daft", will almost certainly vote against this legislation.

The positions of Senator Fielding and Senator Xenophon are unclear, but they support the idea of Internet censorship. Senator Fielding is the most likely to vote in favour of the filter because of his party's socially conservative values.


17 January 2009

The fastest way to drain your mobile battery

I burned through two batteries with my HTC Touch Diamond within about 12 hours while I was at my friend's place. The second battery was a spare that I keep in my wallet. I browsed the Web a little but didn't make any calls.

There is one thing that can rapidly drain the battery of your mobile which you don't hear about: poor network coverage. To overcome the path loss due to factors such as distance or obstructions, the phone has to ramp up the transmitter power output to improve the strength of the signal that reaches the mobile station.

15 January 2009

The three stooges: culprits behind WA's antiquated trading hours

John Cummings
President of the WA Independent Grocers Association
Chairman of the National Association of Retail Grocers of Australia

John Cummings, president of the WA Independent Grocers Association (WAIGA) and chairman of the National Association of Retail Grocers of Australia (NARGA)
  • Lead a misleading fear campaign in the lead up to the 2005 referendum on retail trading hours
  • Lobbies against deregulation

Joe Bullock
Head of the Shop Distributive and Allied Employees Association

Joe Bullock, head of the Shop Distributive and Allied Employees Association
  • Powerful right-wing powerbroker within the ALP who has lobbied against deregulation
  • Links with Brian Burke

Brian Burke
Former premier of Western Australia

Brian Burke, disgraced former Western Australian premier and lobbyist
  • Orchestrated No campaign for small retailers

14 January 2009

The chart that IGA doesn't want you to see

Below is a chart that John Cummings, president of the WA Independent Grocers Association (WAIGA) and chairman of the National Association of Retail Grocers of Australia (NARGA), doesn't want you to see. He, along with disgraced former premier Brian Burke, campaigned against liberalisation in the lead up to the 2005 referendum on retail trading hours.

The No campaign was misleading to say the least. For example, IGA made the absurd claim that extending trading hours threatened 15,000 jobs. Data from the ABS, however, suggests otherwise. The chart shows that with the exception of South Australia, the average annual employment increased in all states and territories in the 12 months that followed liberalisation. South Australia was experiencing a slowdown in retail turnover before trading hours were liberalised in 2003.


The West Australian PerthNow The Australian 3rd Degree Institute of Public Affairs

13 January 2009


Now here's a website that provides the public with more worthwhile information than all those conceived by the Rudd Labor government combined at just a fraction of the cost: LaborWaste.com. It provides the Australian people with something that has been conspicuously absent from this government: accountability.

The website doesn't just document the monumental waste that has characterised the Rudd Labor government, such as GroceryChoice, an epic $13 million fiasco, and Rudd's bureaucratic compulsiveness that has so far led to 168 reviews, committees and enquiries—it accepts tip-offs from the public of any observed waste, inefficiency or mismanagement, allowing individuals to take action in making this government accountable.

Information submitted via the website goes to the Coalition Labor Waste Committee.

11 January 2009

The US government's role in the global financial crisis

Even the most determined lending institution will have difficulty cultivating business from minority customers if its underwriting standards contain arbitrary or unreasonable measures of creditworthiness. Consistency in evaluating loan applications is also critical to ensuring fair treatment. Since many mortgage applicants who are approved do not meet every underwriting guideline, lending policies should have mechanisms that define and monitor the use of compensating factors to ensure that they are applied consistently, without regard to race or ethnicity.

—{Closing The Gap:} A Guide To Equal Opportunity Lending, The Federal Reserve Bank of Boston

People immediately point the finger of blame at bankers and corporate executives in the search for answers to the unfolding global economic disaster. This is not surprising, given the attention the media has given to lenders offering loans to people who were clearly in no position to afford the repayments. Many would have heard of so-called NINJA loans, where NINJA stands for No Income, No Job and no Assets. There were option ARMs that allowed the borrower to select monthly repayments that would increase their debt. Finally, lenders made it easy for borrowers to avoid making a down payment by giving out a second piggyback mortgage to pay off the down payment required by the first mortgage. Clearly there had been a decline in lending standards that fuelled the housing bubble, which eventually bursted and created financial misery for millions. The question that remains unanswered is why were lending standards loosened to such an extent that lenders became virtual mortgage vending machines. Stan J. Liebowitz at The Independent Institute has released a report explaining how the government intervened in the mortgage market with good intentions, but created greater problems than those it was attempting to solve.

In Anatomy of a Train Wreck: Causes of the Mortgage Meltdown, Liebowitz explains how a push by the US government to increase home ownership, especially among the poor and ethnic minorities, led to a weakening of lending standards. There was a perception that minorities were being discriminated against in mortgage applications. As a result, the Community Reinvestment Act (CRA) was passed, forcing banks to provide loans to applicants from all neighbourhoods within the areas they operate. It was aimed at preventing redlining, where banks refused to offer services to residents in certain designated areas. The US government also passed the Home Mortgage Disclosure Act (HMDA), which required lenders to provide detailed data about their mortgage applications. Data obtained via the HMDA allowed lenders to be named and shamed in the media for apparent discrimination by comparing the rejection rates of applicants by race.

Liebowitz concludes that the mortgage meltdown was caused by adjustable-rate mortgages—both prime and subprime—given out under lax lending standards. He disputes the widely held view that the housing bubble and subsequent burst was driven by subprime loans given by unscrupulous lenders to vulnerable clients. Foreclosures for both prime and subprime loans began to soar in the third quarter of 2006, but the main contributors to the rise in each were the adjustable-rate mortgages.

10 January 2009

PETA campaign to save "sea kittens"

Animal rights organisation People for the Ethical Treatment of Animals (PETA) has launched a campaign called Save the Sea Kittens. The aim of this campaign is to create more sympathy for fish by juxtaposing them with kittens. PETA believes that killing animals for eating is inhumane.

A bit of creative work went into the website. There is even a page where the visitor can conjure up their own sea kitten, adding features such as lipstick, dress, whiskers, mohawk or a litter box.

The following rationale is given for their campaign:

People don't seem to like fish. They're slithery and slimy, and they have eyes on either side of their pointy little heads—which is weird, to say the least. Plus, the small ones nibble at your feet when you're swimming, and the big ones—well, the big ones will bite your face off if Jaws is anything to go by.

Many would beg to differ, especially those who keep fish as pets.

The petition tally stands at 2690.

8 January 2009

Rudd's bullying of WA

It appears Prime Minister Kevin Rudd believes Western Australia is less deserving because it is the only state in Australia with a Liberal government.

The treasurer for Western Australia was the only treasurer of any state or territory to be excluded from a pre-COAG strategy meeting held last year, which shows that Rudd's rhetoric on cooperative federalism falls far short of reality. During Senate Question Time on November 26, 2008, Senator Mathias Cormann said:

Senator CORMANN (Western Australia) (3:29 PM) —If there was any further proof required, today we got conclusive evidence that cooperative federalism is nothing more than a political slogan—there is no substance to it; there is no commitment to it—when you listened to the partisan political response by the Leader of the Government in the Senate and he essentially attacked the Treasurer of the state of Western Australia. I asked the Leader of the Government in the Senate today whether there had been any discussions or any representations to the Commonwealth in preparation for the COAG meeting on Saturday as a result of the pre-COAG strategy meeting of Labor state and territory treasurers. The answer he gave me was, ‘Of course; I don’t really understand the question—that is what normally happens.’ And when I asked him, ‘What is the Commonwealth’s view? Does the Commonwealth believe that it was appropriate that the Treasurer of Western Australia was excluded just because he is a Liberal?’, what did the minister say? The minister said, ‘He probably wasn’t excluded because he was a Liberal,’ and in not so many words—I know we are going to get a ruling from the President—the minister essentially said that the Treasurer of Western Australia was excluded not because he is a Liberal but because he is a bad bloke. I happen to think Troy Buswell is a good bloke, but that is not why he should be invited to a pre-COAG strategy meeting. Troy Buswell is the duly elected member for Vasse in Western Australia. He is the duly appointed Treasurer of the state of Western Australia. If there was any substance to ‘the spirit of cooperative federalism’, if the Prime Minister was serious in his commitment to cooperative federalism, he would discipline and reprimand his minister in this chamber for the statements he has made today.

It has now come to light that while Rudd has increased the total number of AFP officers available, he has cut the number provided for WA and been more than generous to his home state of Queensland. Senator Cormann states:

Despite Western Australia having the fastest growing population, the Rudd Government is cutting federal resources to WA, even when increasing them elsewhere.

In early December, I generated a story in relation to the Rudd Government’s decision to cut in half the number of WA based Crime Analysts at the Australian Crime Commission. This was an outrageously ill-conceived measure that rightly attracted significant criticism from senior law enforcement circles across WA.

I have now received answers to some further questions I put on notice in the Senate in relation to Rudd Labor Government funding cuts to Australian Federal police resources in WA.

And don’t think that these cuts are part of a uniform trend across Australia. Federal Labor has cut the number of AFP officers in WA by nearly 10% (the biggest cut in any State), while they were increased by more than 30% in the Prime Minister’s home State of Queensland (the biggest increase of any State).

5 January 2009

Google fails Chinese government: not all 1 trillion pages clean

It appears Google has failed to meet the expectations of the Chinese government. Indeed, the search engine's results still contain links to pornographic material.

Filtering out the pages that violate China's online policy from the 1 trillion that have been indexed by their search engine is no trivial task. Maybe the government of China thinks that Google employs lots of little men who surf the Internet around the clock and check the appropriateness of the content of each page as they index them.

It is difficult to imagine how Google will be able to sustain its business in China. Presently, technology for automatically distinguishing between pornographic material and non-pornographic material is at best highly unreliable and slow.

3 January 2009

Just like Groundhog Day

The never ending cycle of violence between Israel and Palestinian militants with the endless string of ceasefires, unsuccessful peace proposals and vows to open the gates of Hell and exact retribution are so familiar that they leave you feeling that they are trapped in a repeating time loop, just like that in Groundhog Day. Unlike the war in Iraq, this conflict has been raging for decades and a lasting resolution still seems remote in the foreseeable future.

It isn't difficult for Israel to eliminate Hamas as such; it is difficult for Israel to eliminate Hamas without doing likewise for the civilian population. Israel has one of the world's most powerful and modern armies, but the Gaza Strip is one of the most densely populated areas in the world.

While Israel is able to target individuals within the Hamas leadership with their laser-guided bombs, Hamas can only aim their crude rockets at population centres and hope that they will inflict casualties. Whether they are terrorists depends on whose side you're on, however the main effect of these weapons is to create terror because of their great inaccuracy.

The conflict poses one of the greatest security challenges of our generation. The continual stream of footage of devastation we receive in our lounge rooms every evening might be tiresome, but the stability of the region always hangs in the balance. Iran has called for Israel to be wiped off the map.

The conflict between American-backed Israel and Palestinian militants has always strained relations between the United States and its allies and the Muslim world. The Muslim world sees the United States as part and parcel of what they perceive as the oppression of the Palestinians by Israel.