Mateship, it is obvious, can come at a high price

'If he was me mate, he would have showed up." Former union boss John Maitland tells the Independent Commission Against Corruption this week former New South Wales mining minister Ian Macdonald was not his mate because he didn't show up at his farewell dinner.

Crikey, that's hurtful. Give a man a coalmine, make him rich, and what does he do? He goes and tells everybody he's not your mate. It's fair dinkum un-Australian!

Granted, the union boss did concede in testimony before ICAC this week, that he and the minister may have had a "close working friendship". Yes, struck the deal over a magnum of pinot noir at Catalina Restaurant. Yes, there had been no tender - come on, it was only a "training mine". Yes, the training mine somehow become a real mine and found its way into a stockmarket company NuCoal. And yes, John's $165,000 investment happened to turn into $14 million. After all that goodwill from Macca, one can only surmise that John attaches exceedingly rigorous performance hurdles to his mateships.

In the same year that Macca approved the Hunter Valley licence for John, he also opened up tracts of land in the Bylong Valley. That's the spot where, by sheer providence, Labor powerbroker Eddie Obeid had bought a property whose value was soon to rise fourfold.

Eddie Obeid had stewardship of the mines portfolio in NSW from April 1999 to April 2003. Macca came later. A pall has been cast over any mining deal struck by the NSW government in the past 14 years, including those with mining leviathan Newcrest, which operates Cadia, the country's largest gold mine, near Orange.

Gold and Copper Resources - an explorer led by Brian Locke and backed by former Rio Tinto boss Leigh Clifford, founder of Barlow Jonker Jeremy Barlow, former Glencore and Xstrata chairman Willy Strothotte, and venture capitalist Mark Carnegie - is contesting the validity of Newcrest's licences. They await judgment on the first of five court actions over the Cadia licences.

It's a mess, though there is the odd winner from ICAC: the Coalition, we in the media and, of course, Ian Macdonald's dentist to name three (love that smile). But the costs of corruption will weigh on NSW for years to come. A decade of deals can hardly be unwound now.

Historic hit for some

And so the cash rate has been cut to 2.75 per cent, a historic low. It's another hit for the dwindling species they call the self-funded retiree, especially those who eke out a living on term deposits and bonds.

The thing to watch now is the chase for yield. Stand by for a slew of dubious high-yield offerings, "bricks-and-mortar" spiels - the likes of supermarket REITs (real estate investment trusts) in Bunyip, Victoria.

They will appear attractive, and may perform well for a couple of years. Yet these are the next time bomb. The rule of thumb is that, as interest rates fall, asset prices rise. When rates rise again, REITs and their high-yield spruikers will have to refinance at higher rates. Most will have hedged for a couple of years but rising rates mean falling asset prices - and these assets, many of which will be derivatives, are required to be "marked-to-market" by the accounting rules.

Meanwhile, on Thursday night in the US, the punters were spooked by a rumour that the US Federal Reserve might "taper" off on its money-printing program. Ergo, the government would not be buying as many of its own bonds to prop up the stockmarket. Ergo, asset prices would fall.

And fall they did, both shares and bonds. Slowing the printing press? The market would not like that one bit, bemoaned the pundits on business TV. Even gold tanked. The suspicion is that "paper" gold - IOUs to deliver the yellow stuff - are now fetching less than gold itself. The gold bugs reckon there is more paper about than bullion.

Like the proverbial frog in boiling water, the world has become accustomed to the relentless money printing in the US and Europe and Japan. But the consequent asset bubbles can hardly be pricked as the US can't afford to strap on more debt or pay more on its present obligations. So the Fed is trying to whip up inflation to whittle away the debt while avoiding a sell-off in bonds.

For those who haven't seen it, take a look at USdebtclock.org, a real-time reminder of America's debt. It is ticking up towards $US17 trillion now, and unfunded liabilities now stand at a bloodcurdling $US124 trillion. The bulls cry, "New normal," the bears scream, "Armageddon." What seems sure is that the fundamentals are just as perilous but people simply tired of the bear market. It is not in the human spirit to endure more than three years of pessimism and despair.