THE DISTILLERY: Swan gazing

Of course the banks will dominate affairs this week with Federal Treasurer Wayne Swan revealing the details of the latest attempt to 'do something' about competition etc etc etc. The RBA meets tomorrow and won't do anything to change interest rates. The bank plan from Mr Swan will be the week's publicity generator. A silly season special so early before Australia tunes out over Christmas and January? Give me a Christmas ham anytime, more meat on those bones.

Peter Martin wrote in the Fairfax broadsheets this morning: "Australia's big four banks will face government-backed competition and much greater scrutiny as part of measures aimed at weakening their market position to be unveiled on Wednesday. The five-point plan of the Treasurer, Wayne Swan, to be presented to cabinet today, is short on detail in a number of areas, and proposes more consultations with banks and consumer groups to draw up measures that will work. Mr Swan is keen to avoid a repeat of the dashed expectations that followed his bank-switching measures in 2008, when no telephone information hotline was provided and a website was poorly maintained."

And The Australian reported: "As the Treasurer prepares to unveil his "second wave" of banking reforms this week, including measures to crack down on mortgage exit fees, he has backed consumer group Choice's new Compare, Switch and Ditch campaign, to be launched today. The Choice online mortgage calculator offers the case study of a $300,000 variable mortgage with the ANZ bank that could be reduced by $85,000 if families switched to Mortgageport's Essential Home loan product or Better Option's 6.64 per cent rate. And borrowers could save more than $75,000, according to the website, by switching to Newcastle Permanent or IMB."

A report in a London newspaper has made its way to The Australian about a possible Rio Tinto takeover: "Rio Tinto is to make a $3.5 billion takeover play for Africa-focused Riversdale Mining in a move to increase its exposure to coking coal. Locally listed Riversdale has extensive high-quality coal deposits in Mozambique, which is the subject of intense interest from China and India. The nation is expected to become the world's second-biggest exporter of coking coal after Australia by 2025. A report in Britain's Daily Telegraph newspaper at the weekend said Rio was in talks to buy Riversdale for about $15 a share, a 90c premium to its closing price on Friday." And The Australian Financial Review reported: Australia's three largest iron ore producers are aiming to boost their combined exports from the Pilbara region to more than 1 billion tonnes a year by the end of the decade, from 390 million tonnes last year."

And the paper also reported that: "QR National is preparing for its first week of normal stock exchange trading since its $6.2 billion float amid concerns that abnormal rainfall in Queensland could hamper its coal operations." Green shoe gone?

Fairfax's Ian Verrender wrote on Saturday: "The sound effects arrived right on cue; the furious gnashing of teeth and high-pitched wailing after the Australian Taxation Office this week decided to choke off one of the most blatant ever tax rorts in a country with a long and colourful history of rorting tax. To the horror of all concerned, the ATO declared that it was tightening the tax noose on private equity firms, that loose group of international structured finance locusts that pillaged companies across the globe during the past decade. The immediate reaction to the decision was stunned disbelief, followed by a tirade of abuse that later gave way to grave warnings of the damage this would inflict upon the nation."

And, in The Australian this morning, right on cue, another friendly bleat about the ATO from the private sharks club: "The latest court stoush between private equity sector and the taxman will cause uncertainty, diverting capital to other countries. The Australian Private Equity and Venture Capital Association said the tax office's move to freeze the local assets of US-based Resource Capital Funds (RCF), one of the biggest private equity investors in the resources sector, would send "a shudder" through the industry. "These (tax) structures have been created with the best legal advice," association chief executive Katherine Woodthorpe said. "The whole thing is just getting too hard, so they're saying they'll go to India or China instead," the association's chief said." That's an odd comment, China and India are proving almost impossible for private equity companies to do deals.

The Sydney Morning Herald's economics editor, Ross Gittins continues his primer on the economy: "Oh, no! The economy was roaring along in June quarter, growing by 1.1 per cent, but now it has almost come to a halt, up just 0.2 per cent in the September quarter. What's more, take out a leap in rural production and we actually went backwards. It made a great story this week – thrills and spills in econoland – but I wouldn't believe it. Why not? Because in real life economies don't soar and dive in the space of six months without there being a very big and obvious reason – the introduction of the goods and services tax, for instance, or the collapse of Lehman Brothers and its aftermath scaring the pants off businesses and consumers. Sensible people, however, always take them with a grain of salt, knowing the economy is far more stable than the stats – especially quarter-to-quarter changes – show it to be."

And this morning another ripsnorter of a column from Mr Gittins: "The notion that there is, or will be, a wide and enduring gulf between the mining states and the rest is wrong. It's wrong because, in industry terms, it's not a two-speed economy it's a three-speed. Top speed is mining and associated industries. Low speed is the non-mining tradeables sector – agriculture, manufacturing, education and tourism. But in between is the non-tradeables sector. And get this: the non-tradeables sector accounts for about three-quarters of the economy. So the great majority of us work in neither the fast lane nor the slow lane. What's more, the non-tradeables sector benefits from the high dollar because that makes imported parts and equipment cheaper." A very good read.

The Australian Financial Review's Chanticleer spotted a change in one sector of the market in the weekend edition: "Something out of the ordinary and of national significance happened in the roller-coaster world of Australian biotechnology this week – a major company declared a dividend and then stuck its neck out with a promise to keep paying more dividends in the future."

And the paper also picked a possible 2011 hotspot: "Already rattled by Europe, bond investors may take aim at the United States next year, especially if political bickering frustrates efforts to cut the US budget deficit and hold down national debt."

The Weekend Australian carried a report that Macquarie Group is winding back its presence in the Middle East: "Macquarie Group has quietly shrunk its operations in the Persian Gulf after failing to generate enough business to justify a major presence. The company has roughly halved its staff in the region to about 50 bankers over the past two years as it stakes its future growth plans on more mature markets like the US and Europe, which are still struggling to recover from the global financial crisis, the persons who declined to be named told Dow Jones Newswires."

And Terry McCrann wrote in The Weekend Australian: " Right now the free-to-air television networks are in a sweet spot. Not the sweet spot. That was in the balmy – barmy – days of late 2007 when they were living the promise of their oligopoly licences to print money. The Howard government's communications minister Helen Coonan had played the role of your "one Alan Bond" to both James Packer and Kerry Stokes. Thanks to her, and the last great insanity of the global easy money private equity binge, the duo were able to cash in their licences for a combined value of about $10 billion. Sweet spots don't get any sweeter than that. But the networks are back in a sweet spot now. First, the federal government is once again throwing money at them. This time it's $250 million of taxpayer funds, more formally known as a licence fee rebate." And the Pay TV industry isn't in the sweetest of spots, which might start annoying James Packer and Kerry Stokes, not to mention News Ltd. So who will turn up at the Ten AGM in Sydney on Thursday? James Packer, Bruce Gordon, Lachie Murdoch or Gina Rinehart? Or will they be shy and retiring?