Unconventional Economist


Low interest rates aren’t spurring businesses

By Leith van Onselen Barclay’s chief economist for Australia, Kieran Davies, has argued that uncertainty about consumer spending and inflexible expectations of investment returns has made Australian companies less inclined to invest in response to reductions in interest rates. From The AFR: …the abundance of cash on companies’ balance sheets and high hurdle rates – the


McCrann guzzles kool-aid on super concessions

By Leith van Onselen The Australian’s Terry McCrann penned a curious piece over the weekend, supporting Tony Abbott’s claims that “there is a world of difference between taxpayer-funded benefits and people’s own savings [superannuation concessions]”: A tax expenditure is not the same thing as an actual expenditure… The critical intersection of all this is the


Krugman warns again as TPP enters “end game”

By Leith van Onselen The Trans-Pacific Partmership (TPP) trade agreement moved one step closer to conclusion on Friday, with the US Senate passing so-called “Fast Track Authority”, which would allow the President to negotiate an agreement and have Congress pass it without amendment. The Fast Track bill will now move to the House of Representatives


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 24 May 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;


Auction clearances sealed in bubble

The national auction clearance rate rose over the weekend, continuing the strongest run of results for around six years. The preliminary national clearance rate was 78.4%, up from the 76.4% recorded last weekend, according to Core Logic-RP Data: Sydney’s clearance rate rose 1.4% to 86.9%, whereas Melbourne’s jumped by 5.7% to 80.0%. Clearances in Brisbane,


Links 25 May 2015

Global Macro / Markets / Investing: Overvalued in Silicon Valley, but Don’t Say ‘Tech Bubble’ – New York Times Is Finance Parasitic? – Uneasy Money The Risks of Owning an Individual Stock – alphaarchitect.com Like Buffett, Another Folksy Investor Turns Patience Into Profit – Wall Street Journal Here’s a great chart showing all the times


Pascometer talks super sense

Fairfax’s Michael Pascoe (the “Pascometer”) is talking way too much sense these days, today tackling the prickly issue of superannuation: Superannuation tax expenditure – that is, what the various super tax breaks cost the budget – will soon match the cost of the actual pension and do very little to reduce pension costs… “The tax


Solar power to transform the electricity market

By Leith van Onselen The electricity “death spiral” has, for a long time, been a key risk facing electricity generators/distributors globally. The “death spiral” arises when demand for power declines, due in part to customers taking up solar, leading to higher prices to cover fixed network costs. That is, the more people that take-up solar


Inequality worsening, but Australia better than most

By Leith van Onselen The OECD has released a new report on inequality today, which revealed that two-fifths of the populations of developed countries have gained little over recent decades, driving rising income and wealth inequality that is damaging economic growth. The report finds that wealthiest 10% of the population now earns 9.6 times the


When pork fails

By Leith van Onselen Hot on the heels of its calls to “end the age of entitlement”, the Abbott in early 2014 provided a dubious $16 million grant provided to Cadbury in Hobart. It was revealed later that Alastair Furnival, who was at the time chief of staff to Assistant Health Minister Fiona Nash, had


Super industry talks book on pension changes

By Leith van Onselen Industry Super Australia (ISA) has released some perverse analysis today arguing that modest income earners would lose the most from the Government’s tightening of the assets test for the Aged Pension. From The Canberra Times: …middle income Australians would be dealt the heaviest blow – losing more than $100,000 over their


Woeful affordability thrust back under spotlight

By Leith van Onselen The AFR has produced an alarming report today on the rapidly declining levels of housing affordability across Australia, with families in Australia’s three biggest cities struggling to find well-located accommodation for under $750,000: Prospective purchasers with $750,000 to spend on a three-bedroom house in the first four months of the year had


Opposition parties too late the hero on TPP

By Leith van Onselen At the eleventh hour, Labor, the Greens and the cross-benchers have united to raise concern about the Trans-Pacific Partnership (TPP) trade deal, which is entering its final stages of negotiation. From The Guardian: The Australian parliamentary working group, founded by Labor’s Melissa Parke, Greens senator Peter Whish-Wilson and independent senator Nick


Was QLD really in recession last year?

By Leith van Onselen New Queensland Treasurer, Curtis Pitt, argued yesterday that the state economy was in recession in late 2014, recording two consecutive quarters of negative growth in gross state product (GSP) between June and December – figures disputed by the Liberal Party. From The ABC: [Pitt] said the state accounts show that gross


Links 22 May 2015

Global Macro / Markets / Investing: Guilty Pleas and Heavy Fines Seem to Be Cost of Business for Wall St. – New York Times Banks Will Keep Doing the FX Stuff That Got Them in Trouble – Bloomberg View OECD Sees Continued Rise in Growth-Harming Inequality – Wall Street Journal North America: Kansas has found


Salt of confusion

By Leith van Onselen KPMG’s Bernard Salt has posted an article in The Australian today predicting a recession in 2018: If my decade-long wave theory is correct, there will be no buffer in 2018 and a lack of experience in dealing with a recession by the electorate, by politicians and by business leaders and this


Budget’s worsening deficits are about falling revenue

By Leith van Onselen ABC News has published a neat primer on the Budget, which argues that the deficit has been driven by so-called unexpected falls in receipts – most notably from lower commodity prices (mainly iron ore) – rather than spending decisions taken by past and present governments: The budget papers once predicted a


Kiwi exodus turns to flood

By Leith van Onselen Statistics New Zealand has released its permanent & long-term migration figures for April 2015, which revealed that net migration to New Zealand remained near record highs in seasonally adjusted terms: Moreover, net annual migration from New Zealand to Australia hit its lowest level in more than 23-years, with April also recording