Matt Connolly's Blog

my brain dumps here…

Tag Archives: economy

optus fusion = corporate greed

I nearly signed up for an Optus Yes Fusion earlier in the year, and it turned out that Optus was unable to get a connection to the line in the unit where I’m renting. At first, it seems like good value, but there’s something in the fine print that’s ridiculous.

When the data limit is reached on most plans, the ISP usually does one of two things:

  • speed limit for remainder of month, or
  • charge for excess usage.

I don’t know anyone who likes to pay excess usage. Particularly when the price for the excess is exorbitant. Most excess usage is around $6/GB (see whirlpool) but sometimes it’s as ridiculously high as $150/GB.

The Optus fusion plan gives you the worst of both. How? They charge you $300 for the first 2GB over the limit, and then shape speed.

So Optus reserve the right to make $300 off you for 24 months contract period if you go over your data limit in a month.

I’m glad to say that my ISP, internode, defaults to shaping but gives the choice to buy more data for the remainder of the month, at a reasonable price of $2.50/GB. I’m happy to have the choice, and the price is fair. That’s what you don’t get with Optus Fusion.

Say No to corporate greed, say No to Optus Yes Fusion.

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Why invest in Banks?

Some time ago, I had an interesting thought about the value of banks – and whether or not we should invest in them.

Banks loan money to people. They provide all sorts of credit: home loans, personal loans, credit cards, etc.

Many banks are listed on the stock exchange – so what are their shares really worth?

Two ways of valuing a business are their assets and their income:

ASSET: A bank’s asset is the money they lend you. On your balance sheet, it’s a liability, on the bank’s balance sheet, it’s an asset. Paying off debt reduces a bank’s assets.

INCOME: A bank’s income is the interest they charge you on credit. On your profit and loss statement, interest charged from a loan is an expense; on their profit and loss statement, it’s income. Paying off debt reduces a bank’s income.

It seems that one of the major factors in the world’s current financial crisis is bad debt.

Let’s consider the possibility of people paying off their debts. Firstly, why would people want to pay off debt?

  • So you can eventually own your own home.
  • To reduce interest payments every month and free up cash flow
  • Gain financial independence
  • Prepare for retirement
  • Be a conservative investor without the risk of suffering from margin calls
  • and, I’m sure there are plenty of other good reasons, too…

Secondly, what would happen if people actually paid off their debts?

You would reasonably expect the banks to lose share value since the act of reducing debt reduces both asset and income for the bank.

So when you invest in bank shares, what are you really investing in? DEBT. Yet people believe that bank shares are a safe investment – safer than biotech, IT, mining or many other industries….

I hope this triggers some thoughtful comments and discussion….