Global Bust Round II; Australia Mining Contagion; Vindication for Steve Keen Coming; What about the Loonie and Australian Dollar?

Another synchronous global bust is underway. It started in January with the Shanghai stock market and it has now spread to equity shares everywhere.

This review will focus on the commodity producers, especially Australia. Let’s start with a review of the Bloomberg article Mining Tax ‘Contagion’ Set to Spread From Australia.

Australia’s planned 40 percent tax on mining profits has set a benchmark for other countries weighing higher levies, reducing earnings forecasts for BHP Billiton Ltd. and Rio Tinto Group and the attraction of mining stocks.

“It could create what the miners are now describing at a global level as a type of tax contagion,” said Tom Price, commodities analyst with UBS AG in Sydney, in an interview. “They might levy a new tax at the miners in Brazil. Canada is another mineral province and South Africa.”

BHP, the world’s largest mining company, Xstrata Plc and Rio said they are reviewing projects in Australia, the No. 1 exporter of coal and iron ore, after the government unveiled the tax this month, saying a country’s resources belong to the people. Citigroup Inc. Sydney-based analyst Craig Sainsbury said Canada, Peru and Chile may be next.

Chile, the biggest copper exporter, is proposing a temporary rise in mining taxes to help pay for earthquake reconstruction that may cost BHP, Xstrata and Anglo American Plc $1.2 billion in the next two years. Brazil, the second-biggest iron ore exporter, may tax shipments of the commodity or raise royalties, Energy and Mining Minister Edison Lobao has said.

The Australian tax plan is “global financial markets suicide,” according to Charlie Aitken, the executive director of Southern Cross Equities Ltd., the equal top ranked predictor of BHP’s share price performance of 17 analysts, according to data compiled by Bloomberg.

Mining companies’ earnings may be cut by almost a third when the tax starts in 2012, Moody’s Investors Services said this week. The tax would be broadly credit negative for the sector and raise uncertainty for some companies over the short- to-medium term, Moody’s said this month