Captain's Update log 23 March 2006

Update to Son of a Guambat:

"Six Month Winner Announced!
At the close of trade yesterday, March 20 2006, Solon Brown from Macquarie University has taken the national lead and wins the $600 Six Month winners prize. Solon's portfolio is up 89.99%. Over the same period the ASX300 is up 9.9%.

How did he do it? One word: "Resources". Diversified resources company Perilya Limited leads his portfolio with a 200%+ return. Zinifex, Kagara, Oxiana and Consolidated Minerals (down 40%) make up the rest of Solon's resources-focused winning portfolio."

If truth were known, he owes his success to doing the exact opposite of what Guambat told him to do. He'd been last place if Guambat weren't short.

More on Papua (and this post, too):
They're walking the floor over you

A VARIETY of hardwood threatened in South-East Asia is showing up in flooring in the United States, where manufacturers, distributors and retailers are failing to ensure the wood's legal origin, the Environmental Investigation Agency said.

Flooring made from merbau, a dark red wood found mostly in Indonesia but elsewhere in South-East Asia, is being sold in home improvement stores, a report released by the agency shows. "Deep red, orange, and brown hues accentuate the exotic beauty of this tropical treasure from Indonesia," reads text on merbau displays in several US states.

Merbau is mostly found in the Indonesian province of Papua, whose merbau forests have been ravaged by illegal logging.

Last year, before a crackdown, 300,000 cubic metres of merbau logs were being smuggled out of Papua each month, worth about $US600 million ($837,000) at retail flooring prices.

Indonesia banned all log exports in 2001 in an effort to protect its forests, which suffer the world's highest deforestation rate.

"Merbau in general is a really high-risk species," said Alexander von Bismarck, the agency's senior investigator in Washington.

"And if it's from Papua, there's a really, really good chance it was illegally logged."

Despite the crackdown, thousands of acres of forests were felled illegally every day, the report Behind the Veneer said.

The world's largest wood flooring company is Armstrong World Industries, a US firm that recorded $US832 million in worldwide sales of wood flooring in 2004.

"There is no indication that any of these companies have broken any law - nor is there evidence that they are fully aware of the potential origin of the wood they are supplying," the report stated.

[Sounds like the Howard team trying to distance itself from the AWB scandal.]

And further to the Papua story, the Herald opines today, Greed, guns and gold:

THE giant Freeport gold and copper mine is carving a scar so vast and deep into the remote forests of Papua that it will soon be visible from space. Downstream, a swelling bruise of a billion tonnes of mine waste has rendered wetlands inhospitable for aquatic life. The stupendous profits generated by the world's largest copper and gold mine largely pass the indigenous Papuans by. That the mine has become the violent flashpoint in their dogged campaign for independence is unsurprising. Democracy in Indonesia has, rightly, raised expectations for accountability. The reckless polluters of Freeport, the abusive military units stationed in Papua and the civilian government in Jakarta are on notice: the bad old days of impunity are over.

Under the former authoritarian president Soeharto, foreign mining companies in Indonesia enjoyed cosy deals. The US-operated Freeport mine barricaded itself behind a security cordon and built an industrial city in the middle of one of the world's pristine, and most fragile, natural environments. A recent New York Times investigation revealed Freeport has made $US20 million in direct payment to Indonesia military officers - protection money to ensure Indonesian troops do the dirty work of keeping the ragtag Free Papua Organisation, with its spears and few rusty guns, away. Freeport employs 18,000 people and has pumped $US33 billion into the Indonesian treasury since 1992, contributing almost 2 per cent of gross domestic product. But like the oil and gas riches of Aceh, little wealth has been returned to the province, and local complaints are met with violence, intimidation and abuse. Last week, thousands of angry Papuan demonstrators set upon and killed four Indonesian security officers. The murders, and the rage that sparked them, shocked many Indonesians. But as The Jakarta Post noted: "The reasons for the protests in Papua are obvious." If Papuans lose all hope for change the "situation could become more dangerous", it warned.

Australia does not support independence for Papua, but with 43 Papuan asylum seekers being processed, Canberra cannot ignore the new unrest. There have been many empty promises of autonomy and demilitarisation for Papua since Soeharto's fall in 1998. Indonesia's military, with its vested interest, is undoubtedly frustrating change. The Bougainville copper mine in Papua New Guinea provides a warning. It provoked such a violent campaign for self-rule that it was abandoned in 1989. Almost a decade of conflict followed. The glare of the international spotlight on Aceh following the tsunami forced a peace deal there. Papua deserves the same attention.

And finally, an update to Risque business: In that post I had mentioned some of the changes in "olden days" market behaviour brought about by the new-age Matrix guys. This morning, on CNBC, Art Cashin also made another observation about the changes in the importance of the old market breadth indicator, the advance/decline line. He said the truly important figure was volume: "volume equals validity". He said the new block trades dealt in so many stocks at a key stroke that the advancing and declining numbers no longer had the significance they used to have on days when the overall volume of trading was low, suggesting that the participation rate was not supporting the price action, notwithstanding a positive A/D line.