Links: 21st September

Global Macro:

  • Aircraft carriers are awesome The Diplomat and expensive, and necessary…
  • Commodity boom has peaked as QE3 (and BOJ QE9,10,11…) has faded Bloomberg
  • Robert Shiller (of Irrational Exuberance fame) tears apart the econ convention on telling stories Project Syndicate

North America:

  • Jobless claims, slowing manufacturing points to stagnant economy Reuters Chart from Scotty Barber here
  • Stocks fall on worries that QE3 won’t do anything Bloomberg worry? Its a fact! But perceptions, not facts drive markets
  • Stephen Roach calls it all a charade Credit Writedowns
  • Charts! of QE’s ineffectiveness FT Alphaville
  • More charts! Copper vs US equities correlation Scotty Barber at Reuters
  • Final chart! Where is the US in its “beautiful” deleveraging? Business Insider 
  • Household debt is rising however Reuters – hence unemployment not going up as income from debt offset a slump



  • Chinese to strike gold down under WSJ saw this 1st hand in WA
  • The Myth that Japan is “broke” Huff Post well, no country is ever broke, except in Europe…
  • Who’s afraid of the big bad China dragon the most? The Economist no surprises there…
  • Expats are leaving The Middle Kingdom Sober Look


  • Managing the China downturn down under The Cupboard – yeah like we managed the boom?
  • Garnaut’s report on post China boom is gathering support Dad’s Army
  • And another critical blow – Santos says Japan’s cut of oil link to LNG will hit gas projects here The Cupboard (locked) this is very bad news
  • Whilst the Business Council focuses on public sector job cuts The Cupboard good one fellahs.
  • IMF says our banks are too cosy and still big risk to financial system Fairfax probably still say “stress tests=everything is fine” too?


  • Misleading Charts 101 Forbes – certain real estate industry types should read this, but probably won’t.
  • Hedgies want bigger cut of pie down under AFR good luck with that


  1. Of course household debt in the US is now rising! Those who had saving have pretty much rum out of them, and they too now have to borrow to live. The longer this mess goes on the poorer all our middle classes will get.

    • Actually Janet, householders in the USA have higher savings rates now than pre GFC, and they have paid down $1 Trillion in debt. There problem is that they haven’t had a wage rise for 40 years.

  2. And here in OZ I believe we are in an unemployment twilight zone where the confident (or foolish) run down savings waiting to be snapped up ….. This is the aspirant class that think they can go it alone a la Johnny Howard.

    The numbers will be in in Feb 2013 IMHO

  3. The Myth that Japan is “broke”

    How similar is this to SK ‘debt juibilee’?

    That the Japanese have been able to play the long game – build manufacturing base and buy foreign assets whilst having a revolving door of Prime Ministers is amazing. I wonder if the higher powers in Japan make the big calls and the PM plays at the edges.

    I can only hope for this type of long term thinking in here going forward. The article mentions the US borrowing from external sources, but I assume the same would apply for AUS?

    • I was thinking the same thing.

      The connections to aspects of MMT are clear as well – even though MMT does tend to hide its light under a bushel with its comms style and points of emphasis.

      Slowly but surely the dots are being connected from a range of sources.

      The problem is orthodox western financial thinking about the role of private banks and how govt expenditure is managed anf financed.

    • Yes, thought the speech aired very valid concerns.

      Although in the links above it is cheekily dismissed as a call to cull public servants with “good one fellahs” I am sure MacroBUSINESS intends to review and discuss the contents in a serious manner.

      • I would say everything macrobusiness has been discussing over the past 2 years or so is encapsulated in her speech. And I note she doesn’t mention cutting public sector wages by 20%. How cheeky of her to dismiss serious discussion of that particular issue.

          • I’m not sure how one squares the circle of creating a ‘high quality’ public service staffed by ‘high quality’ people who are nevertheless happy to accept low wages while their white collar bretheran make a killing in the private sector and rub their noses in it, all the while the media and politicians bang on about useless and lazy overpaid public servants at every opportunity to tap into the public’s generalised and nebulous discontent, and perpetuate the notion that public service is a despised and pitiful career choice. Good thing we’re able to review and discuss these issues seriously.

          • Spleen, the reduction in PS wages discussed yesterday was an ‘in need’ scenario – eg Ireland.

            PS salaries range from low to very high, the PS for some years leading average income increases across all sectors. PS Managerial salaries are very well remunerated. Some very competent people work in the PS. Many of less ability work in the PS, bell curve effect but with a bigger tail.

            Paying even higher salaries will in no way ensure better decision making nor performance – a furphy much promoted by those on public payroll.

          • Unless we are forced to explicity bail out our banks, we’re not gonna be Ireland. I would say their circumstances, made worse by an inability to adjust their currency, created an unambiguous sense of crisis that engenders the kind of all in this together approach – which left them with little choice but to accept a reduced cost for their labour. I don’t see that we will be in the same position where the public sector (and the public at large) accepts that their wages should be explicitly cut by 20%. I’m not sure you can dismiss the reality that the public sector has had to play catch up in the wages on offer, for the very reason that it is trying to attract higher quality people who would otherwise chase relatively higher wages in the resource, finance, IT or private legal sector. As to whether those higher wages actually attract ‘quality’ people is a far more complicated issue. It is a pretty knee jerk response to generalise about all public servants and deem them unworthy of their current levels of pay. One could argue the similar furphy as it relates to the remuneration of senior management and executives in the private sector.

          • PS salaries range from low to very high, the PS for some years leading average income increases across all sectors. PS Managerial salaries are very well remunerated. Some very competent people work in the PS. Many of less ability work in the PS, bell curve effect but with a bigger tail.

            So it’s pretty much the same as any other business, then.

    • Public sector job cuts certainly wasn’t the main content of the speech. Much more about productivity, regulation, and the need for the public service to refocus on long term policy development.

      • Exactly – also reference to short-termist thinking and fixes (brings to mind the alarming policy on the run modus op of the current government). Short-termism a favoured topic here at MB, generally much criticised.

        • Ok..Short-termism,is probably what you should have done on a “Mining Bust” story..3d,n Bot no,instead more,n you just grabbed the carton of Crownies and proceeded to bore us with your deepest program’s…of self gratifications to nowhere..quick..Kapeesh

    • +1 Alex.

      Yes , a very good speech. This is why we need to pay higher taxes and borrow. Australia is becoming increasingly reliant on big Govt to fund no value jobs , based on stupid wasteful decision making. The waste is appalling and this is just part of it.

      “Professor Wiltshire worked with the Institute of Public Administration Australia earlier this year to test 22 major federal programs including Building the Education Revolution, the National Broadband Network and the home insulation scheme. Three-quarters of those programs failed the “Wiltshire test”………….. Based on federal government outlays over the past five years, the poor decision process had probably cost taxpayers $15bn to $20bn,”

  4. I do know this is not connected to economics, buut..

    “The true Apple fans don’t pre-order. They line up. I’m expecting a lot of happiness and relief once I get the phone.”

    I do wonder how the poor deer (and other fan[atics]) are going to cope with

    Disclaimer – I was gifted a iPhone 4. I’m saving to purchase a Windows Phone 8 device. 😉

    I dislike and mistrust this iCloud concept.

  5. In regards to your:
    “And another critical blow – Santos says Japan’s cut of oil link to LNG will hit gas projects here The Cupboard (locked) this is very bad news”
    (which is the reason why they buy our gas at 3 or more times the price in other markets)

    From Bloomberg: “Shell Leads LNG Competitors Out to Sea With Biggest Ship: Energy”
    It basically says that onshore LNG plants will be replaced by floating ones in the future due to escalating costs.

    I wonder what’s going to happen in Perth when the current projects are completed.