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An economics lesson for the population ponzitiers

When foreign supermarket chains ALDI and Costco entered Australia, did Coles and Woolworths welcome them with open arms? What a silly question. Of course not. The entry of foreign competitors undermined their pricing power. So much so, that recent RBA research credited the entry of ALDI with a 13% reduction in grocery prices. Good for

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Property money launderers have no better friend than Oz government

By Leith van Onselen For several years, this site has lobbied the federal government to extend Australia’s anti-money laundering (AML) regime, which currently only extends to financial institutions, to real estate gatekeepers including realtors, lawyers and accountants. These “second tranche” of AML rules have been in limbo since the federal government first promised to bring

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APRA delivers threatening lettuce leaf to banks

Via Banking Day: APRA will insist on more consistent rules on the assessment – and reassessment of borrowers over loan serviceability, a measure intended to bolster other rules that, in effect, may restrain credit growth. In guarded language in a letter to all banks and ADIs yesterday, the Australian Prudential Regulation Authority said a revised

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NZ house prices to fall 12%

By Leith van Onselen After last year forecasting an 11% fall in New Zealand house prices by 2019, economic analysis and forecasting firm, Infometrics, has forecast a 12% decline in house values by 2020 on the back of falling population growth (net migration) and rising interest rates: “Mortgage holders in Auckland look particularly vulnerable to

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Links February 24, 2017

Macro, Markets & Investing The Trump ‘bubble’ skeptics are getting louder, but when — or if — it pops is anyone’s guess – Financial Post Preparation underway for Donald Trump, Xi Jinping to meet at G20 summit in July, sources say – SCMP OPEC searching for proof oil output cuts working – SCMP Federal Reserve minutes

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Macro Afternoon

by Chris Becker Asian stocks are not having a good day in response to the mixed overnight lead absorbing the FOMC minutes fallout. Aussie 10 year yields were firmly bid higher as was the Aussie dollar itself in response to the capex print, while metals and other commodities slid back. The Shanghai Composite is losing ground

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Ken Henry’s eight point plan to save Australia

From the AFR: Our politicians have dug themselves into deep trenches from which they fire insults designed merely to cause political embarrassment. Populism supplies the munitions. And the whole spectacle is broadcast live via multimedia, 24/7. The country that Australians want cannot even be imagined from these trenches. …Based on current estimates, Australia needs to

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Sunday penalty rate cut another hit to wages growth

By Leith van Onselen Over the past two days we’ve witnessed real wages barely increase: And more importantly, real average weekly earnings registering zero growth after falling 2.1% since May 2013: And now we are likely to get more downward pressure, with Fair Work Commission slashing penalty rates for Sunday workers, affecting literally hundreds of

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Real average weekly earnings take a pounding

By Leith van Onselen The Australian Bureau of Statistics (ABS) has released the Average Weekly Earnings (AWE) data for the six months to November 2016. A breakdown of the key changes are provided below: According to the ABS, on a seasonally-adjusted basis, national total AWE increased by 0.9% in the six months to November 2016,

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Mining capex falls heavily in Q4

By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the December quarter of 2016, which registered another 2.1% seasonally adjusted fall in capex volumes over the quarter and a 15.5% decrease over the year (see below table). While Houses and Holes will cover the forward-looking capex

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Are central banks really independent?

After yesterday’s suggestion that a brick would do as good a job as Phil Lowe at the RBA owing political sensitivities, Goldman Sachs offers this chart on central bank independence: The Goldman piece was about highlighting how the US Fed doesn’t actually have that many legal protections if Trump decides to test his powers. I

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Only in Australia could fighting a housing bubble make you a racist

By Leith van Onselen Doomsayer. Gloomster. Recessionista. Mischievous grumpy bum. These are all names used against housing bears in Australia. But now we’re all racists as well. RBA Governor Phil Lowe yesterday lamented the ‘insidious’ resentment of immigrants caused by the over-crowding of Australia’s major cities, and called on governments to dramatically lift infrastructure investment.

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Is Europe going to swing Left or Right this year?

As the de-globalisation movement gathers momentum, the basic assumption for all analysts should be that the political centre is dead. The “third way” as it was called, which drew in parties from Right and Left to a central consensus that pursued open borders economics is now political poison across the developed world as the losers

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Ken Henry warns on unplanned population growth

By Leith van Onselen In July last year, Ken Henry raised the alarm on Australia’s excessively high population (immigration) growth, noting that “our population is growing at a rate that exceeds the capacity of traditional models of planning, building and pricing access to the nation’s infrastructure and housing”. Then in December, Dr Henry returned to

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Super-housing fix a ‘stupid idea’

By Leith van Onselen The Coalition’s latest brain fart to allow first home buyers (FHBs) to access their superannuation to fund a housing deposit has quickly been shut-down by the funds management industry and Labor. From The Australian: Industry super funds yesterday warned against the plan, saying it would reduce retirement savings, drive up housing

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Fed warns on Trumpflation

The USD was roughly stable last night: Commodity currencies were mixed: Gold held on: Brent fell back: Base metals too: Big miners were hit: EM stock held gains: US high yield too: The US bond curve flattened: European spreads widened: And stocks held highs: Fed minutes summed up where we’re at pretty well: In discussing

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Population ponzi overruns new Sydney rail long before open

By Leith van Onselen Back in November, secret NSW Government documents revealed that the Parramatta Light Rail Project – the centrepiece of the Government’s plans to cement Parramatta as Sydney’s second central business district, as well as facilitate the building thousands of apartments around Sydney Olympic Park – has experienced a massive cost blowout and