I was recently sent an article comparing the economic policies of various Australian governments past and present, which set off an interesting string of email discussion with various members of my family. During this discussion my father decided he was appalled at the thought his daughter felt the need to take out sovereign risk insurance.
Sovereign Risk is described by economists as what happens when governments default on their debts. A concept that's come up a lot over the last few years, though not often by that name. Sovereign Risk is considered particularly relevant by industries such as mining which have a very long-term return on investments. When starting an open-cut mine, for instance, one expects it will be in operation for several decades. 'Soverign risk' is the possibility that the government of the day sometime further down the track along those several decades will make decisions which change the profitability of the mine from what was first expected. For example, Australia suddenly introducing a mining tax certainly raised Rio Tinto's assessment of its sovereign risk in this country, and the next government removing the tax just makes the economic climate more uncertain rather than less risky (Not that I particularly disagree with the mining tax - it just provides a good example).
Kyle and I have many reasons for pursuing the project around which this blog is based. One of them, is that we are concerned about the direction public opinion and political will is taking society around us. Whilst we are quite well off, and would ourselves probably end up in the category of the 'haves' rather than the 'have nots', current policies lead to the type of society we don't particularly want to live in anyway. On the off-chance that the general public hasn't quite woken up to this yet and votes the Liberals back into power we're looking at a collective future in which individuals cannot depend upon social support services. We don't want to risk being tied to expensive mortgages and rising energy costs, necessitating the stressful career choices that would go with supporting that.
Coupled with the inability for government to admit climate change is likely to be a problem, leading to food/water/energy/safe housing shortages in 30-40 years, we figure we may actually need to support ourselves on that front for at least some length of time. Sounds rather extreme, and a little bit on the side of sci-fi apocalypses, but more and more becoming a real possibility for the distant future.
If you stop bothering to attempt to convince conservatives that climate change will happen and we need to plan for it, or that social policies will benefit us all in the long run, then you start thinking about how to survive it if they don't. We figure on the off-chance that it pans out that way we should probably think about living outside the systems we won't necessarily be able to depend upon. The alternative is moving to another country (Jenny, by virtue of ex-pat well-travelled parents, has triple citizenship, so we would be able to do this fairly easily), but it begs the question of where to?
So, in a sense, we are looking at the long term plan for ourselves within this society and developing our own insurance for that eventuality. Thus, amongst so many other things, this project represents some insurance in the form of self-sufficiency against the risk that not enough is done to slow the changing of the climate, and that help is unavailable if this or other ills befall us.
Sovereign Risk is described by economists as what happens when governments default on their debts. A concept that's come up a lot over the last few years, though not often by that name. Sovereign Risk is considered particularly relevant by industries such as mining which have a very long-term return on investments. When starting an open-cut mine, for instance, one expects it will be in operation for several decades. 'Soverign risk' is the possibility that the government of the day sometime further down the track along those several decades will make decisions which change the profitability of the mine from what was first expected. For example, Australia suddenly introducing a mining tax certainly raised Rio Tinto's assessment of its sovereign risk in this country, and the next government removing the tax just makes the economic climate more uncertain rather than less risky (Not that I particularly disagree with the mining tax - it just provides a good example).
Kyle and I have many reasons for pursuing the project around which this blog is based. One of them, is that we are concerned about the direction public opinion and political will is taking society around us. Whilst we are quite well off, and would ourselves probably end up in the category of the 'haves' rather than the 'have nots', current policies lead to the type of society we don't particularly want to live in anyway. On the off-chance that the general public hasn't quite woken up to this yet and votes the Liberals back into power we're looking at a collective future in which individuals cannot depend upon social support services. We don't want to risk being tied to expensive mortgages and rising energy costs, necessitating the stressful career choices that would go with supporting that.
Coupled with the inability for government to admit climate change is likely to be a problem, leading to food/water/energy/safe housing shortages in 30-40 years, we figure we may actually need to support ourselves on that front for at least some length of time. Sounds rather extreme, and a little bit on the side of sci-fi apocalypses, but more and more becoming a real possibility for the distant future.
If you stop bothering to attempt to convince conservatives that climate change will happen and we need to plan for it, or that social policies will benefit us all in the long run, then you start thinking about how to survive it if they don't. We figure on the off-chance that it pans out that way we should probably think about living outside the systems we won't necessarily be able to depend upon. The alternative is moving to another country (Jenny, by virtue of ex-pat well-travelled parents, has triple citizenship, so we would be able to do this fairly easily), but it begs the question of where to?
So, in a sense, we are looking at the long term plan for ourselves within this society and developing our own insurance for that eventuality. Thus, amongst so many other things, this project represents some insurance in the form of self-sufficiency against the risk that not enough is done to slow the changing of the climate, and that help is unavailable if this or other ills befall us.
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