Unconventional Economist


Alan Oxley’s TPP defence fails again

By Leith van Onselen Vocal Free Trade Agreement (FTA) advocate, Alan Oxley, has delivered another Panglossian view of the Trans-Pacific Partnership (TPP), which he claims will “will open services markets and free up investment”. From The AFR: Free trade and the Trans Pacific Partnership trade agreement has been roundly attacked, but mostly by groups that


Selling the farm

By Leith van Onselen Chanel 7’s Sunday Night program aired an interesting investigative report on the widespread sale of Australian agricultural land to foreign interests, particularly the Chinese (Parts 1&2 are above). According to the report, there is no comprehensive national list of foreign investment in rural land. However, in Queensland, which does maintain a


How endless population growth makes us poorer

By Leith van Onselen Fairfax’s Ross Gittins has posted a cracking article today lambasting Australian economists’ blind faith in endless population growth and a “Big Australia”, arguing that it is a recipe for lower living standards: Slower population growth meant slower growth in real gross domestic product and this would also make it harder to


Auction clearances still stuck in orbit

Core Logic-RP Data released its auction market report last night, which revealed that the national auction clearance rate rose ever so marginally over the weekend, continuing the record run of strong results. The preliminary national clearance rate was 78.1%, up slightly from the 78.0% recorded last weekend, according to Core Logic-RP Data: Sydney’s clearance rate


Ergas detonates under negative gearing

By Leith van Onselen Another day, another spurious defence of negative gearing and the 50% CGT discount. This time from The Australian’s Henry Ergas, who has written a vitriolic piece attacking the Grattan Institute’s John Daley and Daniel Wood. Let’s take a look at his key points. First, tax efficiency: To repeat, for the benefit


Perth’s last property bull standing

By Leith van Onselen The property industry in Perth are getting desperate. Following the Real Estate Institute of Western Australia’s (REIWA) delusional call a few week’s back that the Perth housing market is set to soar, one of Western Australia’s top valuers claims an opportunity is emerging for astute buyers to get into the Perth market


Links 6 July 2015

Global Macro / Markets / Investing: The Stock Market Crash of 1929 – themoneyalert.com Currency is not destiny – VOX The market economy’s stability – VOX North America: No, Puerto Rico Isn’t Greece – New York Times The Broker Who Saved America – Reformed Broker The Bonds That Broke Puerto Rico – New York Times


When will the US begin normalising rates?

From Westpac’s Elliot Clarke: As the pivotal September FOMC meeting draws ever closer, the magnitude and quality of job gains becomes all the more important. Key from the June post FOMC meeting press conference of Chair Yellen was: (1) her strong belief that labour market conditions had improved markedly in recent years; (2) equally that


Australia’s TPP plans come under more pressure

By Leith van Onselen Former head of the Australian Industry Group, Heather Ridout, is the latest to warn against signing the Trans-Pacific Partnership (TPP) trade agreement, claiming Australia would “regret” signing away sovereignty over government policy. From The AFR: “I’m probably the outlier here but mark my words, we will regret it, if we sign


Iron ore comedy turns to tragedy for Colin Barnett

By Leith van Onselen The situation has gone from bad to worse for the Western Australian Government, and its leader Colin Barnett. After delusionally forecasting high iron ore prices as far as the eye can see in the 2014-15 Western Australian State Budget, along with surging royalty revenues: The 2015-16 Budget announced a horror $2.7


Services sector expands but jobs slide

The Australian Industry Group (AIG) has released its Performance of Services Index (PSI) for June, which reveals that Australia’s services sector finished the year in expansion mode, recording a reading of 51.2, up 1.6 points from May: The services sector expanded in June 2015 after two months of broadly stable conditions. The seasonally-adjusted Australian Industry


How much money is laundered through Aussie homes?

By Leith van Onselen Back in April, the Paris-Based Financial Action Task Force (FATF) on money laundering released its report on Australia, which found that Australian residential property is a haven for international money laundering, particularly from China. The report also recommended that Australia implement counter-measures to ensure that real estate agents, lawyers and accountants


Grattan debunks property lobby’s negative gearing lies

By Leith van Onselen John Daley and Danielle Wood from The Grattan Institute have written an excellent article debunking the Property Council’s and the Real Estate Institute of Australia‘s latest report, prepared on its behalf by ACIL Allen Consulting, defending Australia’s negative gearing and capital gains tax (CGT) discount (debunked by me last week), rubbishing


Coalition to further tighten foreign investor rules

By Leith van Onselen As reported in The Australian this morning, the Abbott Government is set to further strengthen Australia’s foreign investment rules by banning sales to non-residents for the purchase and knock-down of an established dwelling, as well as extending penalties to migration agents marketing Australian temporary residency so that foreigners can buy established


Is Australia still a developed country?

By Alpha Beta Strategy and Economics, republished with permission Resource exports still tanking Australia’s trade data released yesterday shows that our resources exports are in serious trouble. The news coverage has positively reported that our ‘trade deficit shrank in May’. But the lift in our exports this month was less than 1% and a blip


Links 3 July 2015

Global Macro / Markets / investing: Raging Bull Markets: How Young Men’s Hormones Unsettle Finance – Bloomberg How major asset classes performed in June 2015: in short not so hot – Capital Spectator North America: Puerto Rico’s Pain Is Tied to U.S. Wages – Wall Street Journal Why Congress Should Let Puerto Rico Declare Bankruptcy


Lower AUD good news for tourism industry

By Leith van Onselen Fairfax is reporting this afternoon that Australia’s tourism operators remain concerned about the elevated Australian dollar, which is making life more difficult that it should be: The latest industry sentiment survey released by Tourism & Transport Forum and MasterCard found the level of the exchange rate remained the chief concern among


Off-market home sales fuelled by Chinese social media

By Leith van Onselen From Domain today comes fresh insight into how Australia’s real estate agents are offloading homes to the Chinese, some of whom are likely non-residents: Agents are posting an increasing number of properties on Chinese social-media platforms such as WeChat before advertising them to the general market, meaning many of them are being snapped up behind closed


Trade deficit fails to recover from last month’s shocker

By Leith van Onselen The Australian Bureau of Statistics (ABS) today releasing trade data for the month of May, with Australia’s trade deficit improving to $2,751 million after last month’s record blow-out. The result still missed analyst’s expectations, who had expected a trade deficit of only $2.23 billion. It was the 14th monthly trade deficit


How Australia’s Budget is eating our Children

By Leith van Onselen Following on from my post earlier today on the Grattan Institute’s new report, Fiscal Challenges for Australia, which examines Australia’s weakening budgetary position and some of the revenue measures needed to address it, Grattan’s CEO, John Daley, has appeared in The AFR warning of a huge hit to living standards for