Links July 4: Waiting for ratings

In the world

  • Week ahead on the Dow CalculatedRisk
  • Thailand gains first female PM Reuters
  • Fail-safe plan to stop US default Bloomberg
  • Barack Herbert Hoover Obama Paul Krugman
  • Effectiveness of QE Econbrowser 
  • Greece gets bailout but Europe fails maths ZeroHedge
  • Greece’s asset sales NakedCap. I’ve always wanted my own airport
  • Rating agencies could still wreck the Greek rescue by calling it a default Guardian UK 
  • Greece to see year out in recession FT
  • and European interbank lending doesn’t seem to be getting any better FT
  • US banks start mortgage forgiveness NYTimes
  • Financially troubled Vietnam BeyondBrics
  • Indignation, Anger and Confusion in France Over Strauss-Kahn Case NYTimes
  • Global market round-up SMH

In Oz

  • Petrol exempt from Carbon tax TheOz , I’m off to buy a new HSV
  • New Jakarta ban shuts down live cattle trade TheOz
  • Tiger airlines grounded Abc
  • Gittins! joins Carr Gittins!
  • Food security the fear as foreign investors rush in TheOz
  • Mining truck tyre bubble Bloomberg
  • RBA unlikely to raise rates AFR
  • Suncorp burnt by re-insurers SMH
Latest posts by __ADAM__ (see all)

Comments

  1. This is probably the most pompous, arrogant, and completely out-of-touch paragraph Gittins has ever written, and that’s saying something!

    The macro-economically literate understand the huge effect on the economy that’s coming – and will come – from having our terms of trade at a 140-year high and from an amazing mining construction boom. They also understand that this income will spread throughout the alleged two-speed economy.

    Alleged?! If you believe the two-speed economy is real, you are economically illiterate.

    • ‘If you believe the two-speed economy is real, you are economically illiterate.’

      Lorax, I was under the impression you did think there was a two speed economy? Have I misunderstood you or have you had a change of heart.

      I think Gittens! is right in the sense that figures released to date, at worst, show a general softening in parts of the economy – but not yet a significant deterioration.

      However, sentiment is the key and someone here recently attributed that gloomy mindset to international factors (beyond our control), stagnant property, home ATM turned off, carbon tax concerns, poor leadership etc. Generally we have become crushed by the weight of negativity – even if in reality – it’s not as bad as it ‘feels’ (unless you’re a tourist/education operator).

      Perhaps the RBA should just bite the bullet, lift rates, show it means business thereby removing uncertainty of direction and freeing us all to make adjustments and get on with it.

    • I think the major failing with Mad Adam and Gittins! analysis is they ignore the Theory of Reflexivity.

      George Soros came up with this concept, and broadly it means that in contrary to “assessing the fundamentals rationally” and the fundamentals are reflected by asset markets, its the participants within markets, driven by sentiment that then change the fundamentals.

      You could have “solid” (and it depends on how you evaluate the data – Carr’s retail analysis, as shown by H&H is flawed) data, but that data can change because the participants, through acting (or reflecting) on asset markets (by selling down stocks, reducing consumption etc) then change the data.

      • Torchwood1979

        If I understand what you’re saying correctly, that explains where the bullhawks have it completely wrong because they focus on income growth but ignore the fact that households in our post-GFC economy now choose to save additional income rather than use it to take on more debt?

        • Montgomery Burns

          They model the world as being static and linear instead of dynamic and non-linear.

      • And it is the influence of this theory (even if not acknowledged) rather than any fundamentals that is likely to ensure the RBA will hold.

        Most analysts use historical data as a base for future prediction, reflexivity attempts to anticipates future historical data. I think there is a role for it but equally think sentiment can change rapidly given rapid change in circumstance. This is illustrated daily on the markets. To my mind, reflexivity is massive group-think and as such, easily subject to manipulation.

  2. Re the non-Carbon carbon tax – it is preposterous to not apply a carbon tax on petrol and still have the front the justify said tax on everything else.

    The development of the Greens winning reviews on excise on petrol is ludicrous or is the story that Australians prefer a dozen hidden taxes over one transparent one?

    • The whole carbon tax scheme is littered with exemptions, inequities and subterfuge – so not applying it to petrol falls nicely into line, after all coal has been assured a good future by Combet on a number of occasions.

      Can anyone imagine if Bob Brown’s fantasies come true – the Greens having replaced Labor – the economy will be in tatters, the threat of carbon tax impost will be but a fond memory and we are taxed at every turn to pay for any number of socially approved Nanny State schemes.

      • Montgomery Burns

        A Green run economy would definitely be two speed.

        Speed one: are those who derive income directly or indirectly off the taxpayer. These people have their livelihoods assured/guaranteed. Since their lives are not effected by policy decisions they continue to vote Green, drink latte, sip chardonay, read the Fairfax press, and watch Lateline and Q&A.

        Speed two are the rest of us: we end up as hunter gatherers eating beetles and yams.

        • On reflection, will there be many(any) taxpayers. So much of human endeavor pollutes and emits. We may all be banned…Oh, except for industries and foreign capital involved in the building of high speed rail – and then upon completion, execution, Green style (you know, a tear in the eye, a grimaced expression…”but it was for humanity, (no scratch that – too many humans), mmmmm let’s see – HALLELUJAH it was for the planet”.

          And life goes on. The realisation sinks in – all the accoutrements of green life are dependent on – horror of horrors – industrial production….coffee machines, chardonnay vats, Prius’, flights to remote South America rainforests which require saving, domestic dwellings, solar panels, wind turbines [add your favorites].

  3. I see Gittins is making a fair asset,each Monday
    Out of editing to us that ‘Australia sells’ them…How productive of him

    cheers JR

  4. Once habitat extinction occurs, environmental niches are never
    filled. Environmental complexity
    takes millions of years to occur.

    • Habitat extinction may occur, only to be replaced by a different habitat conducive to different species – life will go on. Planet Earth will continue to exist.

  5. Another worthwhile article from Prudent Bear, touching on one of my personal themes, the outsourcing of manufacturing in globalised economies. Sorry guys, services are not the saving grace, IMHO. again, this reflects of the failure of globalised economies to cope in credit restricted global markets, to ensure healthy levels of employment for citizens as a solid economic base.

    http://prudentbear.com/index.php/thebearslairview?art_id=10550