Unconventional Economist

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Links 28 April 2015

Global Macro / Markets / Investing: The great unraveling of globalization – Washington Post Central bankers as supervisors: The bandwagon effect – VOX ‘Flash Crash’ Investigators Likely Missed Clues – Wall Street Journal Deflation? Oil’s 45 pct rebound could be markets’ next headache – Reuters North America: This Is How Fast America Changes Its Mind

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Abbott support plumbs new lows

From Roy Morgan Research comes more bad news for Prime Minister Tony Abbott, although opposition leader, Bill Shorten, is on the nose as well: Former Liberal Party Leader Malcolm Turnbull is again clearly preferred as Liberal Leader by 38% of electors (up 2% since January 12-13, 2015) well ahead of Deputy Leader Julie Bishop 27%

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This Budget, like others, will favour the rent-seekers

Cross-posted from The Conversation: Long before the release of French economist Thomas Piketty’s smash bestseller, it was recognised by social scientists that income inequality in developed countries had been rising for a while. Economists’ stock-in-trade explanation for this trend was that people whose skills combined well with modern production technologies had seen bigger income growth

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More sell ‘em services delusion

By Leith van Onselen Business Spectator’s Victoria Thieberger has penned an article today spruiking the great boom in services exports which can apparently more than offset the commodity bust: Earnings from services exports last year totalled $59 billion, a little less than the $66bn earned from iron ore exports, and are growing quickly. The rise

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NSW government still loving the Sydney bubble

By Leith van Onselen The spectacular investor-driven Sydney property bubble is a frequent theme this blog, with home prices there rising by around 35% since June 2013, according to RP Data (see next chart). This rapid lift in housing prices has, of course, been driven by an unprecedented orgy of investor speculation, whose share of

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Negative gearing is a tax shelter for fat cats

By Leith van Onselen After demolishing Treasurer Joe Hockey’s claim on Friday that unwinding negative would cause a significant increase in rents, The AFR quoted my work in an article entitled: Negative gearing: what’s true and what’s not? This AFR article also contained analysis from the Property Council of Australia (PCA), which claimed that Australia’s

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Auction clearances highest on record

The national auction clearance rate set an all time record over the weekend, although volumes were low on account of Anzac Day. The preliminary national clearance rate was an unprecedented 84.3%, up from the 79.2% recorded last weekend, according to Core Logic-RP Data, from RP Data: Sydney’s clearance rate surged 2.8% to 91.1%, whereas Melbourne’s

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RP Data weekly housing market update

Click to view Core Logic-RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 26 April 2015. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity;

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Links 27 April 2015

Global Macro / Markets / Investing: The Most Important Decision When Selecting a Value Investing Fund – Alpha Architect Why risk is hard to measure – VOX Europe’s Top Asset Manager Says Stock-Market Crash Possible – Bloomberg How Low Can Bund Yields Go? – PIMCO Blog ECB Said to Start Buying Covered Bonds With Negative

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Labor still blind on Aged Pension Reform

By Leith van Onselen The Labor party’s denial around the Aged Pension really is beyond belief. Yesterday, while speaking at the National Press Club, shadow treasurer, Chris Bowen, declared that Australia’s pension system was sustainable and not in need of reform: “Let me be very clear, when Joe Hockey says the Age Pension is not

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Measuring Australia’s falling living standards

By Leith van Onselen David Hetherington from the progressive think tank, Per Capita, has released a new paper arguing that Australian households face the biggest hit to living standards in a generation as their earnings power diminishes as the biggest commodity price and mining investment boom in the nation’s history unwinds: Nominal wage growth is

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Joe Hockey flat out lies on negative gearing

By Leith van Onselen Despite being schooled last month on Q&A by the Grattan Institute’s John Daley, Treasurer Joe Hockey has once again come out in defense of negative gearing, repeating the lie that rents would increase significantly if negative gearing was unwound. From The AFR: “If you change negative gearing then there are significant

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Melbourne housing’s second wind blows harder

By Leith van Onselen Victoria’s Department of Transport, Planning and Local Infrastructure (DTPLI) has released March’s data on the number of housing transfers and mortgage lodgements/discharges, which confirmed that Victoria’s (read Melbourne’s) housing market has continued to strengthen after appearing to have peaked in November. According to the DTPLI data, the volume of housing transfers

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Unemployment climbs across regional Australia

By Leith van Onselen The Australian Bureau of Statistics (ABS) yesterday released its detailed monthly labour force statistics, which includes breakdowns of employment and unemployment across Australia’s capital cities and regions. According to this release, the unemployment rate in Australia’s capital cities was 6.1% in March in raw terms, down 0.3% from February. By comparison,

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Links 24 April 2015

Global Macro / Markets / Investing: U.S. Shale Fracklog Triples as Drillers Keep Oil From Market – Bloomberg Why Bitcoin’s male domination will be its downfall – fusion.net This Is Caterpillar’s Forecast for The World Economy – Bloomberg Here’s how rich you’d be if you started buying the Nasdaq at the top of the tech

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A fresh warning for property specufestors

By Leith van Onselen Core Logic-RP Data’s Capital Markets Report for 2015, released today, contains a tacit warning to Australia’s army of negatively geared property investors, who are gearing up into interest-only mortgages at a time when rental growth is plummeting: Over the 12 months to January 2015, weekly rental rates have increased by just

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Perth taxi strike drives users to Uber

By Leith van Onselen There’s nothing like watching a rent-seeking industry fall on its own sword. This week, taxi drivers Perth staged a mass protest outside Parliament House against ridesharing company Uber, with some 200 drivers parking their cars, shutting off their meters, and blockading streets. The protestors claim that car-sharing services like Uber avoid

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Coalition defends negatively-geared ‘battlers’

By Leith van Onselen Just when you thought policy making couldn’t get any lower, we got the following from Social Services Minister, Scott Morrison, who defended negative gearing as a way for battlers in the suburbs to get ahead: “You’d be surprised how many people…particularly in small business who don’t earn a lot of money

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Australian land prices go vertical

By Leith van Onselen Core Logic-RP Data has released its Capital Markets Report for 2015, which contains some disturbing data on Australia’s land costs, which have gone vertical despite shrinking in size: The price of vacant residential land across the capital cities has increased sharply over recent years. Over the 20 years to December 2014,

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Kiwi exodus from Australia continues

By Leith van Onselen Statistics New Zealand has released its permanent & long-term migration figures for March 2015, which revealed that net migration to New Zealand remained near record highs in seasonally adjusted terms: Moreover, migration from New Zealand to Australia was at its lowest level in 23-years: According to Statistics New Zealand: The main

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Salt of the flip flop

By Leith van Onselen “Unabashed supporter of a bigger Australia”, KPMG’s Bernard Salt, continues to make contradictory statements about the desirability of Australia’s world-beating population growth. For years, Salt has been leader-in-chief for a “Big Australia”, producing reams of articles pushing rapid population growth and warning that to not follow this path would lead to