Bankers do the crime but not the time!

imgres Cross-posted from The Conversation: Recently, the head of the Australian Securities and Investments Commission, Greg Medcraft, called Australia a “paradise” for white-collar criminals. Soon after he recanted, claiming he didn’t want the country to become a haven for financial fraudsters. This rephrasing likely followed when Finance Minister Mathias Cormann leaned on Medcraft. The mass media has done an admirable job bringing the CBA financial planner scandal to light, forcing ASIC to finally investigate, the Senate to inquire and the CBA to apologise and provide compensation. Despite this,...
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Australia’s terms-of-trade pounded

ScreenHunter_4694 Oct. 30 12.08 By Leith van Onselen The Australian Bureau of Statistics (ABS) released export and import prices for the September quarter, which portends big falls in Australia's terms-of-trade when the national accounts are released next month. According to the ABS, export prices fell by 3.9% in September quarter and by 9.5% over the year. By contrast, import prices fell by a more moderate 0.8% over the September quarter and by 1.1% over the year (see below table). The fall in export prices were driven by the following factors: This [3.9% quarterly] fall was driven mainly by falls in the prices...
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What Robb must cut out of the TPP

ScreenHunter_3418 Jul. 23 10.44 By Leith van Onselen Labor member for Fremantle, Melissa Parke, has posted a fantastic article in The Guardian warning of the dangers to Australia arising from the investor state dispute settlement (ISDS) clause in the Trans-Pacific Partnership (TPP): ISDS clauses enable foreign corporations to sue a host country for laws or policies, or even court decisions, they find inconvenient and objectionable. This has the effect of giving foreign investors more rights than local investors; more influence than local citizens... They were originally created to protect businesses that invested in...
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Greens whither in petrol excise heat

ScreenHunter_4693 Oct. 30 09.40 By Leith van Onselen Richard Denniss, Executive Director of The Australia Institute and previously Senior Strategic Advisor to former Australian Greens Leader Senator Bob Brown, has slammed the Greens' blanket opposition to, and hypocrisy over, re-indexing fuel excise: Back in 2006, the Greens included the abolition of fuel tax indexation on their list of the top ten budget mistakes made by John Howard. Indeed, they rated it number 1. In 2006, they also called for the reintroduction of fuel tax indexation to fund a climate disaster fund. And in 2010, they had the reintroduction costed by the...
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The GST is regressive. So what?

ScreenHunter_4690 Oct. 30 08.20 By Leith van Onselen Former Australian Treasury official and co-founder of Access Economics, Geoff Carmody, has written a great reposte to those whom oppose raising/broadening the GST because it is 'regressive'. From The AFR: ... a flat tax on consumption, like the ideal GST, is regressive. But offering GST exemptions (fresh food), or a lower GST rate, means giving much larger absolute dollar concessions to the rich rather than the poor. The budget cost of such concessions overwhelmingly favours people who aren’t poor. This is wasteful and ineffective redistributive policy... More importantly,...
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Mining town property markets crash spectacularly

ScreenHunter_4683 Oct. 30 07.37 In this week's SQM Research free weekly newsletter managing director, Louis Christopher, provided a detailed update on conditions in Australia's mining town property markets, which are experiencing a sharp downturn, particularly in hard commodity towns associated with iron ore and coal: It has been sometime since we wrote an update on the mining town property crash that has taken place around Australia, most notably in Western Australia. We last wrote a special in our 2013 Housing Boom and Bust Report. At the time we made note the “hard commodity towns” had well and truly entered their...
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RBNZ shows Australia the way

ScreenHunter_4689 Oct. 30 08.01 By Leith van Onselen The Reserve Bank of New Zealand (RBNZ) conducted its Official Cash Rate (OCR) review this morning, which left the official interest rate at 3.5% as expected. However, RBNZ Governor, Graeme Wheeler, did drop talk of future interest rate rises saying "a period of assessment" is warranted, and also warned once again on the overvalued Kiwi dollar: The Reserve Bank today left the Official Cash Rate unchanged at 3.5 percent. The global economy is growing at a moderate rate although recent data suggests some softening in the major economies, apart from the United States. Monetary...
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Links 30 October 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: What’s An Investor To Do About Bonds? - A Wealth of Common Sense Markets' best six months begin with November - Jeff Hirsch The most important charts in the world - Business Insider Being a contrarian is a lonely business - Millennial Invest Why CEOs love share buybacks - Wall Street Journal Does stock picking work in emerging markets? - Alliance Bernstein North America: Are student loan balances the reason behind more adults living with their parents? - Real Time Economics Peter Schiff : Fed Will NEVER Stop Q.E! The US Economy Will Collapse!...
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Rupert Murdoch is not captain of ‘Team Australia’

ScreenHunter_3706 Aug. 11 08.55 Cross-posted from The Conversation Rupert Murdoch’s special address to an exclusive meeting of the world’s most powerful finance ministers got a second airing this week. In a breathless front-page “exclusive” in The Australian, Paul Kelly reported that his boss warned the world’s financial grandees their policies were serving to widen the gap between rich and poor, which was leading to social polarisation. Kelly’s article was not an “exclusive” – others had reported the same speech on October 17 – and it was not “news” as the dinner had been held on October 9. While...
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“Bullshit jobs” are costing the economy

ScreenHunter_4672 Oct. 29 12.35 By Leith van Onselen Deloitte-Access Economics has released a new report claiming that excessive 'red tape' and compliance is costing the economy some $250 billion in lost productivity, much of which has been brought about by companies' own internal rules. From Peter Martin: Deloitte Access says government regulations cost about $27 billion a year to administer and cost businesses $67 billion a year to comply with. But it says red tape imposed by businesses themselves costs $155 billion a year - $21 billion to develop and administer and $134 billion a year to comply with... "Businesses...
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Do liberals kill housing affordability?

539w By Leith van Onselen Trulia's chief economist, Jed Kolko, has produced an interesting analysis showing how the more liberal Democratic strongholds in the US tend to have far lower housing affordability than the more conservative Republican states: Trulia categorized the 100 largest metros as red [Republican] or blue [Democratic] depending on their 2012 presidential vote. ...when we compare red and blue markets in terms of affordability and related measures... none of the 10 reddest markets had a median asking price per square foot above $130 in Sept. 2014. But nine of the 10 bluest markets did....
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How to get the states on board federal reform

ScreenHunter_4651 Oct. 27 12.31 By Leith van Onselen The AFR's Alan Mitchell has written a solid piece prognosticating about the best tax reform options to reform Australia's federation. Predictably, Mitchell mentions raising/broadening the GST in exchange for lower income taxes, which according to the OECD could produce a long-term increase of almost 1% in Australia’s GDP in the event of a 1% shift in the tax mix. The OECD's estimate is broadly supported by professor John Freebairn, who has previously noted that “changing the tax mix from (income taxes to indirect taxes) brings gains of 20c to 30c in the dollar and...
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Accountants highlight 457 visa flaws

ScreenHunter_4668 Oct. 29 07.44 By Leith van Onselen Back in July controversy arose after it was revealed that the Abbott Government had chosen to keep accountants on a list of in-demand occupations for skilled migrants, going against the both the Department of Employment's and the Australian Workforce and Productivity Agency's (AWPA) recommendations to remove accounting from this list due to significant labour surpluses and “deteriorating outcomes for graduates . . . relatively low pay rates for bachelor graduates and weak employment outcomes for masters graduates”. It was understood that universities, which derive...
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NSW Budget booms on property, until…

ScreenHunter_4529 Oct. 16 07.50 By Leith van Onselen The New South Wales Government yesterday released the final result for the 2013-14 State Budget, which revealed a surplus of $1.247 billion driven by a huge lift in stamp duty receipts on the back of the booming housing market. The result is a huge turnaround from the $329 million deficit originally forecast for 2013-14. The General Government Sector Budget Result was a surplus of $1.2 billion, and the Net Operating Balance of the Total State Sector was a surplus of $2.8 billion. The improvement over the original 2013-14 Budget forecast largely reflected stronger than...
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Lateline does China’s property bust

ScreenHunter_4669 Oct. 29 08.44 By Leith van Onselen ABC's Lateline last night ran a segment entitled China's bubble bursts, which briefly examined the rapidly slowing Chinese housing market, where sales have fallen by 10% on average across the country since the beginning of the year, and it now takes around 15 months to sell a property in Beijing compared with between six to seven months last year. Given real estate construction accounts for around 16% to 20% of Chinese GDP, the strength of the Chinese housing market has direct implications for Australia, which provides most of the raw commodities (e.g. iron ore and...
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Links 29 October 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Building a personal margin of safety - Abnormal Returns Crude price slide starts to hit profits of big energy companies - Financial Times We’re Witnessing The End Of The Oil Era - Business Insider The world can’t pile new debt onto old - The AFR North America: America Has Given Up On Innovation - Click Hole Krugman: Ideology and Investment - New York Times Capital spending softens, but consumer confidence rises - Reuters Why Americans Will Believe Anything You Tell Them, in One Chart - Bloomberg Oil price fall changes Mexican budget...
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How Tesla will revolutionise the Aussie car market

ScreenHunter_4663 Oct. 28 14.21 Cross-posted from The Conversation: Electric vehicle maker Tesla will soon deliver its cars to Australian roads. This promises to change both the type of cars we drive and potentially the way we buy them. Tesla remains a relative oddity in the US auto market. It is on target to sell around 35,000 cars in 2014, in comparison to GM’s 10 million. But Tesla’s market capitalisation (which is a shade below US$30 billion) is around two-thirds of GM’s – so the pundits see plenty of upside for its EV technology. Interestingly, it is not just Tesla’s cars and its pioneering technology that...
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Barnett’s blundering attracts more attention

ScreenHunter_35 Jun. 13 06.16 By Leith van Onselen The Guardian's Greg Jerico has done a nice job today highlighting the shallowness of Western Australian premier, Colin Barnett's, bleating over rising iron ore supplies and falling prices: [Colin Barnett] has accused the two big miners, BHP Billiton and Rio Tinto, of flooding the market with iron ore and thus bringing down the price. The collapsing iron ore prices are set to smash the WA and Australian government’s budgets. But the governments can’t blame the miners when both budgets anticipated much higher iron ore prices than we now have... [Barnett] told the...
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Coalition dodges Senate to raise petrol tax

ScreenHunter_04 Sep. 23 15.14 By Leith van Onselen The Abbott Government's sensible bid to have fuel excise indexation restored has found new life, with the Coalition using the 'alcopops' precedent to steer around the Senate blockage and raise fuel excise from November. From SBS: Finance Minister Mathias Cormann said the government would use "tariff proposals", to be tabled in parliament this week, to bring about the hike. The same type of proposals were used by the Labor government to push up the tax on alcopops. From November 10, the rate of fuel duty will rise from 38.143 cents a litre to 38.6 cents a litre - the...
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ANZ-RM consumer confidence bounces

ScreenHunter_4660 Oct. 28 11.47 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index continues to bounce around, this time recording a rise of 3.0 points (+2.7%) to 114.6 in the week ended 26 October, taking it above its long-run average reading of 113.2 (see next chart). This week's increase was driven by a 10% jump in households’ view of economic conditions over the 12 months to the highest level since mid-April, along with a 3.9% increase in expectations of economic conditions over the next five years. The below chart plots the most recent Westpac-Melbourne Institute Consumer...
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RBA’s Ellis mis-diagnoses Australian housing

ScreenHunter_01 Jun. 28 09.52 By Leith van Onselen The RBA's head of financial stability, Luci Ellis, delivered another thinly veiled defence of Australia's exorbitant housing costs in a presentation last night to an urban planning seminar at Sydney University. From The Canberra Times: ...people's ability to service existing mortgages had not changed much in the past 10 years. During that time, houses prices had fallen as well as risen, she said. "Prices have risen faster than consumer prices, but they have not risen materially faster than household incomes," she said... The current low-interest, low-inflation,...
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ACA does Chinese property investment

dfgw By Leith van Onselen Last night, A Current Affair (ACA) presented a detailed segment on Chinese investment into Australian property, which showed frenetic auctions of pre-existing homes being undertaken in Mandarin, along with some interesting interviews with market participants, including Dave Platter who works for Juwai.com, which markets Australian homes direct to Chinese buyers. Definitely worth a watch, and should place more heat on Australia's ineffective and broken foreign investment...
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State politics should not overtake Federation reform

ScreenHunter_4654 Oct. 27 16.32 By Leith van Onselen It hasn't taken long for Tony Abbott's pledge to fix the federation to hit its first stumbling block, with a number of the states hitting back at the proposal to adjust the GST. Leading the opposition appears to be Victoria's premier, Denis Napthine, who was first to state that Victoria had no interest in backing a GST rate rise, and instead called for a 'fairer' distribution of funds to Victoria, which only receives 88 cents in every dollar of GST revenue raised in the state. Queensland Treasurer, Tim Nicholls, and Tasmanian premier, Will Hodgman, then backed...
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How to save the Federation

ScreenHunter_4651 Oct. 27 12.31 By Leith van Onselen The Committee for Economic Development of Australia (CEDA) yesterday released a 193-page report entitled A Federation for the 21st Century, which examines key issues for Australia's federal system of government and assesses what can be done to improve the current structure and policy outcomes. The report identifies key areas where changes, such as how taxes are allocated to states, could improve the delivery of core services including public transport, education, roads, health and welfare, as well as how a range of reforms could reshape the nature of the Federation and make...
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Links 28 October 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Global turbulence triggers flight from EM equities - Financial Times Advanced economies’ sovereign debt: 100 years of data - VOX The distributional effect of quantitative easing - bruegel.org Is economic growth permanently lower? - Financial Times Goldman slashes 2015 oil price forecast, as output tops demand - Reuters Here comes the most bullish five days of the year - Ryan Detrick So you are a risk taker - Wall Street Journal Risk tolerance: the ability to deal with losses - Aleph Blog North America: Today’s Deficit is not the...
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