Links August 28th

Global Macro:

  • Hugo Chavez visits site of refinery explosion that killed 41. CNN. Venezuela’s oil infrastructure, accounting for 94% of the nation’s exports, is in a shoddy state. With accidents like this he’ll have to work extra hard to rig the next election.
  • Deep political problems also plague Saudi Arabia. Financial Times
  • Assad regime accused of killing 200. Guardian

United States:

  • Republicans defy a gathering storm. Washington Post
  • Twelve US cities where the housing recovery is still a dream. Business Insider
  • And before the recovery’s even gotten started, Wall Street invents a new way to add system risk to the property market. Naked Capitalism. It’s called securitised rentals.
  • And on a similar topic, why America still won’t seek justice for the crisis. Credit Slips
  • They just punish banks for dealing with the Iranians. BBC. Unicredit is the latest.
  • The decline of America’s ‘Empire of Illusion.’ Jesse’s Café Americain. But is US finance really at its fin de siecle?
  • Luckily the US arms industry is booming. NY Times. Weapons sales tripled in 2011.


  • The ECB should promise bond purchases, if not target yields. Wolfgang Munchau
  • Indeed. The pain in Spain is about to intensify. Bloomberg
  • Unsurprisingly, more London bankers want to move to Singapore. CNBC


  • China has two weeks to deliver stimulus or it faces embarrassment. Reuters. But is embarrassment enough in a single-party state?
  • Like America, China’s weapons industry is doing pretty well. Washington Post
  • Meanwhile in Waziristan, has China’s bin Laden been killed? Long War Journal
  • Indian PM denies impropriety in coal license deal. Wall Street Journal. Sure, but someone in the government was getting his hands dirty.
  • Meanwhile. India follows China’s lead in censoring objectional online content. The Diplomat. No real news here. India has been censoring for decades.
  • Samsung shares drop on Apple intellectual property suit. BBC
  • For more China-focussed links, check out the post by Sinocism later today.


  • Australia’s finance sector ranks third in market cap to China and the US. Deal Journal Australia. For a country of less than 30 million, we are either the new Switzerland or the new bubble.
  • But is Switzerland, not Australia, the new home of mining profits? Daniel Woker in The Interpreter
  • Tony Abbott: there is no going back to the past. The Australian. Welcome to the brave new world instead.
  • Is the China growth story a fairy tale? AFR. You tell me.
  • No, the investment pipeline is strong says Cameron Clyne. AFR
  • Ad spending growth forecasts slashed. The Australian


  • Belarus is the new hot tech hub. Business Week. Lots of smart engineers in the former Soviet republic, but without an open society don’t call it Silicon Steppe yet.
  • A similar story on Kenya’s burgeoning IT scene. The Economist. And yes, they do call it Silicon Savannah.
  • Intellectual power and responsibility. Daniel Drezner. Here, an academic-celebrity writes about academic-celebrities who get upset about other academic-celebrities.
  • The haunting story of China’s economic migrants. The Guardian


  1. Samsung shares drop on Apple intellectual property suit. BBC

    IMHO, Apple has become a giant law firm dealing in patent law (some less generous than me would call it trolling), with a subsidiary tech company attached to it.

    Want to walk the dog, with a mobile phone in your trouser pocket? There is an app a patent for that.

      • Apple’s been vying for evil empire status for a while now, but they’re nowhere near the market share of Microsoft in the non-phone market even now. Google and Facebook are competing heavily for the evil title when it comes to the web.

    • They’ve been nominally awarded $1bn for this lawsuit – while their revenues are in the range of $46bn. I don’t think it’s at the patent troll stage yet.

  2. Schnitzelburger

    Can someone point me to any (objective) evidence that Venezuelan elections are rigged? I’ve seen a lot of claims but they seem to only come from Western media, likely with U.S. interests behind them.

    And wasn’t it just last week that Abbott was going to take us back to Howard’s “golden age.” Now that it comes to IR reforms, Howard is like, so totally last decade. A week is a long time in politics!

    • We’re just had a heated debate on this topic and I don’t want to extend it. However let nobody pretend that the current ‘Fair Work’ monstrosity is working. No matter what you think, it will prove to be a steady grind to further non-competitiveness and unemployment…particularly in the small business sector. One could be forgiven for thinking it is deliberately aimed at dewstroying the small business sector so the powerful can have better control.

      • Schnitzelburger

        I won’t comment on IR, since it’s not something I know much about. I was commenting more on Abbott’s windvane-ism.

        Last week – “The longer this government lasts, the better the Howard government looks and that’s why the Howard government now looks like it created a golden age of prosperity which is lost,” Mr Abbott said.

        This week – “Let’s face it, John Howard is two prime ministers ago; John Howard is at least three Liberal leaders ago. That was then, this is now. There is no going back to the past,” he said.

        I found that moderately hilarious 🙂

        Tony should know that we need business certainty in Australia around the new golden age. Are we having one or not?

        • Ah…thanks Schnitz…agree entirely. Yes I missed the contradiction!
          A new golden Age…God help us! I see a note from Steve Keen on the subject in Business Spectator re the private debt levels.

  3. “And before the recovery’s even gotten started, Wall Street invents a new way to add system risk to the property market. Naked Capitalism. It’s called securitised rentals.”

    Amazing!!! Exactly!! That’s why all this QE, negative RAT rate rubbish will never work. It is just back-filling to try to restore a system that was already unsustainable with the further problem that you just make everything worse and nobody has learned anything.

  4. World’s Biggest Pension Fund Sells JGBs To Cover Payouts

    “Payouts are getting bigger than insurance revenue, so we need to sell Japanese government bonds to raise cash,” said Takahiro Mitani, president of the Government Pension Investment Fund, which oversees 113.6 trillion yen ($1.45 trillion). “To boost returns, we may have to consider investing in new assets beyond conventional ones,” he said in an interview in Tokyo yesterday.

    For Australia the end of the Japanese Yen Carry trade?
    Can negative RAT interest rates continue in the rest of the world?

    • I like the first paragraph:

      We have been saying for a long time that anyone in the western world who’s 10-15 years away from collecting their first pension payments, shouldn’t expect to get much, if anything, when the time comes. This is because, obviously, the economy has deteriorated as much as it has. It’s also because, in essence, pensions plans are the ultimate Ponzi schemes.”

      I guess this US article in a way is also relevant to our government pension in Australia.

  5. The article is good follow-up to yesterday topic about university graduate gluts in China and how it is better to lower your expectation. This is the South Korean version:


    President Lee Myung-Bak has repeatedly urged college students to lower their standards and seek jobs at lesser-known companies, and has adopted more programmes to support vocational high schools.”

  6. Indian PM denies impropriety in coal license deal. Sure, but someone in the government was getting his hands dirty.

    LOL, unless you mean a second layer of muck on top of the mud embedded in the Indian political system… Did you see the 2G spectrum auction scandal previously? The scale and audacity of that scam was breathtaking.