Links – 24th Sept

Global Macro:

  • WTO cuts global trade growth outlook ABC
  • Excess bullishness Capital Observer
  • ECRI Weekly indicator index growth at highest level since July 2011 dshort
  • Olive oil up 50% in 3 months The Economist
  • Why 2013 will be better according to Barclays eFX News

North America:

  • Schedule for the week ahead Calculated Risk
  • Mortgage rates and MBS yield spreads continue to grow SoberLook
  • The plight of the transports BeSpoke
  • Treasuries recoup most of QE3 losses amid growth skepticism Bloomberg
  • Who is owed by the US NY Times
  • BoA, Merrill Lynch loss linked to options error WSJ
  • Goldman Estimate: QE3 could be $1.2 to $2.0 trillion Calculated Risk
  • Pension crisis looms despite cuts WSJ
  • Great graphic: Lost decade ahead? Marc to Market


  • Euro-Zone States Plan to Boost ESM to EUR2 Trillion – Spiegel DJ Newswire, that old rumour again.
  • Troika sees €20bn gap in Greece’s budget DJ Newswire , Spiegel(via translate)
  • French PM supports giving Greece more time on deficit Reuters
  • Portuguese government backflips on new taxes CNBC
  • Spain ‘will need extra bail-out’ Telegraph UK
  • ECB may not surpervise all banks: Merkel ally Reuters
  • ECB in ‘panic’, says former chief economist Juergen Stark Telegraph UK
  • Václav Klaus warns that the destruction of Europe’s democracy may be in its final phase Telegraph UK


  • Reception to mark 40th anniversary of normalisation of China-Japan ties adjusted Xinhua
  • Fresh protests in Japan-China island row Al jazeera
  • China will not ease grip on property market – paper Reuters
  • China ‘takes delivery of first air craft carrier’ France24
  • Japan to switch focus to US-led trade pact WSJ
  • More China links to come in the daily ‘China links’


  • Whoops! Combet slams door on car handout secrets AFR
  • Labor industrial relations regime under siege in Queensland TheOZ (locked)
  • China targets dairy industry AFR
  • Leadership needed to avoid catching eurovirus , says David Murray TheOz (locked)
  • Judge warns of tax threat to foreign investment AFR
  • Bribery scandal widens The Age
  • Slowing boom to hit bank earnings TheOz
  • Homes cheap at the price and selling well AFR
  • Fear over property sales plan Domain
  • It’s all become a little too desperate in Queensland Real Estate CourierMail


  • “The Drugs Don’t Work”: How the Medical-Industrial complex systematically suppresses negative studies Naked Capitalism
  • Iran’s revolutionary guard says expects Israel to launch war Reuters and more Sabre rattling
  • Netanyahu’s red line marks split with US FT
  • Borrowing against yourself WSJ
  • Kickstarter matures Felix Salmon
  • Four-degree rise demands a 90-degree re-think SMH
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  1. “Credit default swaps (CDS) which are used as a type of over-the-counter insurance against debt, (were) non-existent before 1996. By 2006 there were $60 trillion worth of credit default swaps written to cover just $6 trillion of debt. “That just doesn’t make sense,” (Paul Volker)

  2. The Marc to Market graphic showing real incomes is a scary graph. Is Australia a similar picture? My gut tells me that the average Aussie income buys a lot more in 2012 than the average 1990 income bought back then.

    • America ain’t seen nothin’ yet.

      One has to go to neoliberalism’s workshop, Latin America, to see the real wretchedness wrought by neoliberal policies.

      Take Mexico, for instance. Neoliberal policies began to be rolled out during the 1970s during the presidency of Lopez Portillo.

      Today, after two financial crises, Mexico boasts the world’s richest man, Carlos Slim, the purchasing power of the average Mexican workers’ pay is only 50% of what it was in 1982, and the country is bordering on chaos:

  3. Václav Klaus said:

    “Political elites have always known that the shift in decision-making from the national to the supranational level weakens the traditional democratic mechanisms (that are inseparable from the existence of the nation state), and this increases their power in a radical way. That is why they wanted this shift so badly in the past, and that is why they want it today,” he writes.

    Yep. The transnational capitalist class has a well-crafted plan. It knows exactly what it is doing, and why.

    • Or as Hannah Arendt put it in The Origins of Totalitarianism:

      The whole question of human rights, therefore, was quickly and inextricably blended with the question of national emancipation; only the emancipated sovereignty of the people, one’s own people, seemed to be able to insure them…

      The full implication of this identification of the rights of man with the rights of peoples in the European nation-state system came to light only when a growing number of people and peoples suddenly appeared whose elementary rights were as little safeguarded by the ordinary functioning of nation-states in the middle of Europe as they would have been in the heart of Africa. The Rights of Man, after all, had been defined as “inalienable” because they were supposed to be independent of all governments; but it turned out that the moment human beings lacked their own government and had to fall back upon their minimum rights, no authority was left to protect them and no institution was willing to guarantee them.

  4. China targets dairy industry AFR

    China’s giant sovereign wealth fund is looking to make its first significant investment in the Australian dairy industry, as it tries to lock up food ­supplies for its growing middle class.

    They inspected two large dairy operations in the state’s north which have a combined value of more than $200 million and significant capacity for expansion.

    Yep!! We can just keep over-consuming! We can just keep selling assets to pay for it!

  5. A seen in that AFR piece, we’re starting to see a pretty steady drum beat from RE agents now re the need for vendors to adjust their expectations downwards. They’ve clearly realised that they can no longer panic the purchaser muppets into buying. Time to move on to the vendor muppets. Will be interesting to see if they have any success there. I’d say that vendor muppets are probably quite a bit cannier than purchaser muppets (older on average, anyway). So far just the usual anecdotal rubbish in the MSM.

  6. Borrowing against yourself – WSJ

    Interestingly, this basic concept is rather like that which underpins my alternate monetary system idea (discussed on MB in recent weekends), where every citizen is empowered to act as their own central banker, creating usury-free currency at will, but subject to uniform, preset rules.

    It’s just basic double-entry accounting – when you create (digital) currency for yourself (using a P2P software program), your Personal Central Bank account automatically registers both a debit and a credit balance. You can spend your credits, but all earnings to your account (ie, wages, selling something) are automatically credited against your debit balance first. No choice. Your account also has a publicly visible pre-transaction “Honour” rating, automatically linked to and determined by whichever is the greater of your credit/debit balances. This serves to discourage both (a) unnecessary credit creation for yourself at any moment in time, and (b) unnecessary “saving” (ie, withholding currency from circulation). If you are greedy (or stupid) and create too much credit for yourself, you will have a poor public Honour rating. If you fail to work, or make/sell things to pay down your debit balance (caused by creating currency), you will not improve your Honour rating. Nil credit and debit balance = a 100% Honour rating. Want to “save”? Buy something real, of lasting value, with your “credits”.

    In essence, this system would allow every individual to borrow against their own public Honour.

      • Do you mean importing something as an individual consumer, or as a business/corporation?

        In either case, if the foreign seller (or payment transaction service) will not accept the national (ie, national due popularly accepted rather than decreed) currency, then of course you are stuck with either not buying said item, or, attempting to trade/barter for it. Nothing to fear there. It’s been done before –

        However, given that I think such a system would rapidly prove very popular – near zero poverty, full employment, unleashed human creativity and innovation – and so result in an exceedingly strong, dynamic economy, concerns/problems re FX restrictions would reduce over time.

        • Your everyman central bank….

          Sounds like an offset account for current and future wages.

          Answer to flawse’s question, sounds like a form of closed markets.

          These have a history of doing quite the opposite of unleashing creativity and innovation.

          They have a history of established vendors sitting back because they have captive markets.

          Sounds like a rent seekers paradise.

          • These have a history of doing quite the opposite of unleashing creativity and innovation.


            FWIW, I can cite several examples of somewhat similar (ie, viz usury-and-debt-free currency) systems that have indeed resulted in the above. Indeed, the link above refers to several – Guernsey, Germany, Abraham Lincoln. Gesellian “stamp scrip” in Austria, and similar systems in the Depression-era USA (promoted by Irving Fisher and positively lauded by Keynes), also proved remarkably successful .. until shut down by (surprise surprise) the respective national Central Bank(st)ers.

            I suspect that you may be dismissing the enormous potential of debt-and-usury-free currency systems rather too readily.

          • I said closed markets, not the citizen based currency, sorry for not making that clear.

            Now I can see perhaps, in the short term, how creative minds not having to scramble for capital would unleash enhanced or new product in the short term.

            But I can easily envisage, as a rational outcome, closed markets becoming the result in very few iterations of activity.

            I can also see it as something that would be gamed.

            I mean your first statement about the double sided ledger entry, it is what bankers are supposed to do under a fiat currency.

            It’s just they have absolved that under “permanent growth strategies” that force them to pish volume, otherwise the existing rules work as is.

          • Thanks for the clarification RP.

            …the double sided ledger entry, it is what bankers are supposed to do under a fiat currency.

            Yes, that’s the very basis of my thinking. To decentralise the process of currency creation, so that each individual is empowered to do what the CB’ers should do, but do not. The challenge, of course, is to build in the rules necessary to ensure that it is done properly, for everyone’s benefit, rather than as a centralised system that (as now) is designed to bleed the wider public dry.

            I can easily envisage, as a rational outcome, closed markets becoming the result in very few iterations of activity.

            I agree. That is a potential risk.

            However, that is also where I think the positive potential lies. Especially thanks to technology (the internet). Realistically, I cannot imagine any government or political party adopting something like this as a reform platform. It would only ever happen (I suspect) via grass roots adoption – the gradual bypassing of the (failing, parasitic) existing currency system, with something that (over time) demonstrates itself to be better.

            Thanks to the internet, a correctly designed system such as this could grow and spread universally. And be very difficult for the authorities to shut down.