Weekend Links August 18th

Global Macro:

  • The stock market is going up – S&P puts as cheap as before the crisis started – @fedspeak
  • Rotation in FX Land into smaller currencies – Wall Street Journal
  • South African Mine massacre – terrible. BBC
  • As Ryan invigorates Romney’s campaign the BBC asks “why is Ayn Rand so popular?” – here
  • White House thinking about SPR release – Reuters
  • MacroBusiness Morning will be back on Monday but here is Bloomberg’s wrap of last night

United States:

  • World’s best economic Journo tees off on Paul Ryan – Martin Wolf in the FT
  • What’s the hold up with QE3 – Big Picture
  • But Reuters says the chances are rising – here 
  • How can this be? Former MF Global CEO faces no charges – New American
  • Sometimes I think America has the best democracy money can buy. Peregrine CEO pleads not guilty to lying to regulators – Reuters
  • US State unemployment breakdown worrying – Business Insider
  • Apple Shares at record highs – Wall Street Journal




  • China acting as Developer loans sour – Bloomberg
  • Business Insider on what is really going on in the Chinese property market – here


  • Australia knows the US is after Assange – SMH
  • Westfield says we are still spending just differently – SMH
  • Who would want to be a Politician – The Australian has a story about the PM and Slater and Gordon
  • ANZ pay freeze – The Australian
  • Suck it up softies! Ken Henry tells manufacturers to accept a high dollar – AFR
  • Income Stocks to be tested – AFR


  • There was a report issued earlier this week saying eggs are as bad as cigarettes. Hopefully not – Time and  Blistree
  • Harvard gets 700 terabytes into a gram – here
  • Dogs get 12 in a row – here. Great to be a Canterbury supporter in 2012 🙂



  1. Saving France, saving Europe?….This comment gave me a chuckle…” But systems that (will) self-destruct, by their very nature cannot be fixed by waving dead chickens around and declaring “we will do whatever it takes….

    • The EU crisis is more protracted than we all realise – Ambrose Evans-Pritchard says; “The world remains in barely contained slump. Industrial output is still below earlier peaks in Germany (-2), US (-3), Canada (-8) France (-9), Sweden (-10), Britain (-11), Belgium (-12), Japan (-15), Hungary (-15) Italy (-17), Spain (-22), Greece (-27), according to St Louis Fed data. BY THAT GAUGE THIS IS PROVING MORE INTRACTABLE THAN THE GREAT DEPRESSION.” Wow and by September to October it will have really hit the fan – GFC2 – moments away!

      • I like this jab at those nasty thrifty Chermans;

        “Yet Europe refused to adjust. Germany is still running a surplus of 5.2pc, down from 7.4pc in 2007. The North has refused to offset the demand squeeze in Club Med. Indeed, Germany legislated its own internal squeeze through a balanced budget law and imposed this curse on the rest of Euroland. The effect is to trap Euroland in chronic slump, at least until the victims rebel and take matters into their own hands.”

        The hide of them! How dare the Chermans be thrifty and manage their accounts so prudently while so many poor Latins and Mediteraneans suffer from their own wasteful lazy and speculative mistakes?

        • GSM do not be too harsh on Club Med, think beautiful Islands, pristine waters and lovely Med food – who would want to work?

        • Maybe those thrifty Cherman banks should have stopped lending money to the poor Latins and Mediteraneans, who then spent it on houses, infra and Cherman cars.

          Debt that can’t be repaid won’t be repaid.

          • Mav,

            Banksters always win. And the Banksters in the Latins are as culpable as any.

            Debt is always reconciled, one way or another.

      • The article by Ambrose Evans-Pritchard is called ‘Five years on, the Great Recession is turning into a life sentence.’ http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9471018/Five-years-on-the-Great-Recession-is-turning-into-a-life-sentence.html
        This is one of the best explanations of the WHY? of the GFC. Actually it is too much savings by the developing nations! ‘Much of the debt will have to be written off. Whether this done by inflation (1945-1952) or default (1930-1934) will be the great political battle of this decade. Pick your side. Pick your history.’

  2. More from Ken Henry:

    ‘There’s simply no feasible increase in productivity growth that would reverse all or even a significant proportion of international competitiveness that’s presently being experienced by Australia’s trade-exposed non-resource industries,” Dr Henry said.

    Well, duh. In other words, you cannot possibly offset a doubling of the exchange rate over the past decade so you simply go out of business, or in economist-speak, the economy “restructures”.

    But Ken disagrees with Warwick that we should try to do something about it, even though the AUD has decoupled from commodity prices. Apparently it will be too dangerous and risky. Of course, there are no risks at all associated with allowing your trade-exposed non-resource industries to be decimated and betting your entire economic future on the Chinese construction sector.

    • Lorax I know we go over this but our situation is worse than you always portray. We are betting our manufacturing, our rural industries and indeed our mines on a continuing flow of hot money.
      The insanity is mind-boggling. My opinions of Ken Henry have remained constant through the years and his current statements just reinforce my thoughts on him.

    • This is a couple of years ago, but I know for a fact developers were dumping upmarket hi-rise holiday let type properties at 20% PLUS discount just months after having sold large tranches at initial offerring prices. Makes the first wave buyers happy -NOT!

      Some speculative properties in Cairns are off 50%.

    • This is Cairns and Port Douglas all over.

      H/T to the R/E agent for calling this bullshit.


      Interesting they used Westcourt in this article as the DFO there is only about 50% occupied with more due to close down.

  3. Europe:

    I’m not sure if this was reported, but Goldman Sachs reduced their holding of EZ debt by 92%. Any message there…

    • “And for those of you who are not millionaire retirees because you spent the past 33 years living above, rather than below, your means, sorry, but you have squandered a once-in-a-lifetime opportunity.” OUCH! A good article by Padley, a once in a lifetime golden goose….Gone! Frugality, modesty & restraint is the new Chic! (it will eventually become fashionable, because it is reality!)

    • It’s another one of those things that “don’t happen” until it does. The world has changed, not many people have realised that yet.

  4. The Australian’s Julia Gillard article has nothing on the posts on Larry Pickering’s (the cartoonist) blog.

    Really extraordinary stuff, naming names and giving and apparently insiders view to Gillards time at Slater & Gorden and the alleged AWU rip off of members funds. Unfortunately in Pickering’s recent post he said his site was under attack from DDoS (I think) and has been hit and miss getting access. If Pickering is accurate, this will likely be the end of Julia. Someone must have given the OK to release the information…

    Read his five part expose here, under the blog heading:


    Guaranteed gripping reading.

    • “Someone must have given the OK to release the information…”

      Yep. The (Union) Boyz have decided that a change is in order , “for the sake of the Party” no doubt.

      One would think they have worked out a replacement. My bet is Crean or some sacraficial lamb willing to take one for the team while the coming debacle plays out. Then, after that dust settles, the Messiah will be appointed to resurrect the Left. We shall see.

    • Dear Mod,

      Any chance we can keep these pages unsullied by political hacks, at least for the weekend?

      Mod: just ignore it/him/bot. We work weekends, so have to expect the hangers’ on to do so as well..although they should be outside playing..I know I’d rather be doing that!

      • The Politics does affect the Business, Patrician – how about we talk about Religion instead???

        • Religion?

          Isn’t it enough to see that a garden is beautiful without having to believe that there are fairies at the bottom of it too? — Douglas Adams

          Remember, Abbott takes advice from George Pell. That’s all you need to know about the man.

          • Yes Lorax I am glad you brought that up, Abbott gets his advice from Pell and Pell from God! Good one! What about Adams though? You Lorax cannot get your advice from him anymore! And any fool would know that you cannot prove that God does not exist….it is an assumption, a worldview, a belief, but alas for you Lorax unproveable!

          • it is an assumption, a worldview, a belief

            Of course, and an absurdly unlikely one, about as likely as the tooth fairy.

          • dumb_non_economist

            Neil, that is very easy, it’s called common sense and there’s also science.

            Looks like you’re wearing your belief on your sleeve!

      • Separating politics from economic policy and issues is impossible but it is good to pretend we can as much as possible. The tribal rantings that fill the interwebs is pretty dull reading.

        Australian politics is just too depressing especially what has happened to the ALP and the Liberal party in recent years. Both are full of cynical opportunists who seem to have an aversion to policy in the public interest.

        I like to think MB is trying to focus on policy and that is an excellent objective.

      • Dear Patrician

        MB linked to the Gillard article in the Australian thereby directing introducing politics on the weekend to the overly sensitive and fragile.

        Clearly something is afoot in the internecine world of Labor politics – Pickering’s posts align with the facts presented in the Australian, although in a far more colourful manner. (Never knew Shorten and Roxon were once an item, did you? Not that it matters. Or does it.) Gillard is a scheduled guest on Peter van Onselen’s Australian Agenda tomorrow – hopefully as interesting an interview as the details surrounding the Gillard’s ‘young and naive’ period.

        Other than that, if you can’t stand the heat…


        • Deus Forex Machina

          It was linked in exasperation at the level of political debate in this nation and the fact that it is so easy to sully reputations with accusations and everyone assumes the article and it’s placement are correct and the accused is not.

          Thus “who’d want to be a politician”!

          I fear for my children’s future as the political debate in Australia spirals downward.

          • I think you may be viewing from the ‘wrong’ spectrum.

            A degree of forthrightness honesty and transparency, whilst rare in politicians, should remain a worthy aspiration. A PM that has already demonstrated ‘flexibility’ in this regard will no doubt be under scrutiny. To be commended, for future’s sake, surely.

            Trouble is, so little our politicians say comes under close scrutiny (particularly Labor) when it does it is presented via spin as an affront.

            For my child’s sake, I hope it is the norm.

          • Trouble is, so little our politicians say comes under close scrutiny (particularly Labor) […]

            Wow. This is pretty much the complete opposite of reality.

    • Not sure what the criticisms of this post are about? 3d just gave us more info on a link posted here. I noticed there has recently been a dos attack on on this link?

      The duplicitous actions of the politicians continue. Assange is hung out to dry by both parties of a system more interested in pandering to the US and the corporate aristocrats.

    • 3d1k

      That was an interesting (and lurid) link. Mr Pickering must be confident in his sources or that a defamation action is politically impossible.

      Whilst being stunned by the contents, it did strike me as requiring input from people who do not like the AWU and whatever part it had to play in the removal of Rudd. Perhaps, that effect is deliberate and was designed to give it added credibility.

      I hope it is not true (even in minor details) as its implications make Hamlet’s lament re the state of Denmark pale by comparison.

  5. Peter Costello in Cairns recently comparing QLD to Greece


    “Queensland has to get its expenses under control. For many, many years the government was spending money it didn’t have and it has racked up a huge debt. Its credit has been downgraded, its interest bills has become its fastest growing expense, it has to get its house in order.”

    “He said work needs to be undertaken in two stages to return to the State to economic health.

    “Stage one is to prevent the situation getting worse and that will take the next three years. Stage two is to try and repay some of the debt, which will take years after that.”

    • Well Goldilocks, you may as well join the under 15% of Green ‘influencer’s’ – but after the election in 2013, it will only be about 10% and in mortal decline. The Howard years are a pleasant dream compared to this present nightmare.

      • Yes, a dream. Spin the voters with a golden era just around the corner…
        Just yesterday I read this, with
        no such golden expectations there. I believe the comments were targeted at all politicians and voters to think about, including the next wannabe government.


        Treasury has warned that the surge in tax revenue before the global financial crisis was an unsustainable “bubble” and that Labor’s mounting list of big-ticket spending promises will have to be funded by deep cuts elsewhere.

        Treasury secretary Martin Parkinson also gave a sombre assessment of the global economy that could have implications for the Gillard government’s plan to return the budget to surplus this financial year.

        Dr Parkinson said he expected ­global volatility not seen since the mid-1970s to continue for the next decade, a trend that would make it harder to fund expensive government policies.

        “The take-out message is that the days of the large surpluses being delivered by buoyant tax receipts are behind us,” he told a business lunch in Brisbane. “With hindsight, it is apparent that part of revenue collections then reflected a temporary ­bubble in the economy.”

        Dr Parkinson said there was an expectations gap: taxpayers wanted more from government than they were prepared to pay for. Taxes might need to be raised and public services cut to meet political promises, he said.

        Also in the same article:

        Bank of America Merrill Lynch’s Australia chief economist, Saul Eslake, said the political parties were ignoring Dr Parkinson’s warnings.

        “He’s been saying that politicians shouldn’t go around raising expectations about big new spending programs without saying how they’d be paid for,” he said.

        Dr Parkinson said Australia was well placed to deal with any global shocks but the uncertain international environment would hit the economy and the budget.

      • Neil,

        I must have misunderstood your comment. It was very brief. Howard Years “a pleasant dream” ???eh?

        The division (obsession with boat people, tampa (the LIES), mimicking One Nation, breeding paranoia, voodoo economics – (selling off 80% of Reserve bank’s gold in late 90s, encouraging reckless debt levels through taxation policy-helping to destabalise our society by destabalising our banking system, reward debt, punish the savers, creating a false sense of wealth amoungst the people, helping to push up asset prices, middle class welfare to buy votes, not to mention the reckless spending when he knew it was the end, created inflation as a result…..I could go on. Dont get me wrong, I hate Labour (i dont vote for them), but Howard years were not a pleasant dream for me. Personally having him as leader was soul destroying. Oh and Iraq….As for this present nightmare – I find it no worse and no better than the Howard Years. Remember, it takes 5-20 years for the effects of a policy to be felt. A lot of what is happening now is a result of 30 odd years of crony economics and fiscal policy. That includes “The Howard Years” End rant. All parties suck. And the 1% suck. And the sheeple suck. And….

        • 🙂 good rant econo!!!!

          ” Remember, it takes 5-20 years for the effects of a policy to be felt.”

          MB please post that at the top of every page as a reminder to everyone!

          • “I’m voting #1 Econo-fart next year…”

            That’s really sweet. But I won’t be running. In order to be a politician you require the following:

            1) to be a good liar
            2) every new friend you make in politics is also your new enemy
            3) to serve the 1%, military industrial complex – inadvertantly displace thousands/millions of people make shitloads of money and be able to live with yourself everyday.
            4) be king/queen manipulator and manipulate people all day everyday

            It is not in my character. I can’t keep track of my lies, I do not have psychopathic tendancies, and even I could be out-witted by the likes of Godwin Grech.

    • What about something like this. Seriously appalling reporting (we have very few journalists in Australia).

      Olympic Dam expansion vital to SA: Abbott


      There was growing concern global economic conditions would force the company to put its plans on hold, and South Australian Premier Jay Weatherill has said he cannot see any justification for granting the mining giants an extension.

      Mr Abbott said the mine expansion was being threatened by the federal government’s new mining taxes.

      “And the best thing that we can do in this country to ensure that that project goes ahead … is to get rid of the taxes that stand in its way.”

      Blazing allegations yet there no reference to a comment being sought from BHP. We will get the government we deserve.

      • He is correct. OD is back on the shelf for now.

        If SA want to commit economic suicide then all Wetherill has to do is not renew the extension. Heat off BHP, heat on the state Govt.

    • That house pictured needs to have something going for it in terms of land or something. It doesn’t LOOK worth $300K. It’s just a cottage.

      • MsSolarFelineAU

        We know that flawse, but “you” go tell the vendors that, cause, that’s what “they” think.

        Ahh, well, it’ll all come out in “the wash”…. 😉

  6. Looks like the property industry has finally found a way to access super funds to benefit property.

    Stop mortgage payments, ask your bank for a notice of foreclosure and gain access to your super. How simple. It might partly explain how the market has levitated on basically nothing for the last two years. How much of that super then became available as redraw for people to keep consuming as well?


    • I wonder if it’s that simple, I hope banks wouldn’t be part of this plan, but who know hey… If does help them it do so

      • I recall someone posting about working for a bank and being in a role where they did little else other than assist people with the documentation required to access their super under hardship. Super’s a honey pot that everyone wants a taste of. If banks are employing staff to exclusively deal with this, how big is it really?

        • Thanks for that link jimbo!

          I’m certain this is true and BIG here in Oz. And it does explain the slow melt of house prices phenomenon here.

          In the US it became a very big trend for people unemployed to raid the 401K to pay off mortgages and other expenses to survive in their house. This was the earlier stages of the GFC and housing bubble collapse. Then followed “jingle mail” as people started walking away from “underwater” mortagages. Calculated Risk was writing about this regularly at the time.

          More here;


          • Cheers.

            Interesting, especially the different mindsets and approaches.

            There – ‘borrow’ from your retirement fund, pay it back.
            Here – it’s mine, I need it now, screw the future we have a safety net called the pension……..again someone else will pay.

    • Jimbo Also the change in rules to allow Super Funds to borrow to buy property. That was the one that really got me going!

      • An interesting anecdote, this weekend at the local shopping center in Canberra was a stall set up offering to invest in US Real Estate within self-managed super. Promising rental returns of 10-15% etc, they handle everything…
        Scary stuff.

  7. “Saving France, Saving Europe – Project Syndicate”

    It’s too late. France cannot be saved. The question is what happens in the world financial system when it is realised France is a non-viable nation. Perhaps also it is not only economically that France is non-viable.