Weekend links

Global Macro:

  • Why everyone loves housing. VOX

North America:


  • UK eyes Swedish bank model. WSJ
  • EU talks collapse. FT Who cares, let’s shop!


  • Chinese liberalism heads in two directions. Econospeak


  • Cap’t Glenn considers retirement. AFR
  • AV Jennings sees turn in construction. SMH
  • RSPT clawback will trigger miner exodus. The Oz So predictable…
  • Tinkler exodus. The Oz
  • Kissing some bank booty. AFR Bullseye!
  • Dollar high forever. AFR


  1. A shallow Vox report, but summed up nicely by “.. better financial education may reduce this bias towards overinvesting in housing.”

    • AV Jennings reveals the next housing demand lever to be pulled

      “Speaking at the company’s annual meeting, Mr Summers said one cause for cautious optimism was the belief that housing in Australia was still understocked and immigration was continuing to grow”

  2. Diogenes the CynicMEMBER

    Stevens getting out and Tinkler’s demise are two more canaries about the difficulties ahead. It ain’t going to be pretty folks!

  3. “economist Paul Krugman put it: “Iceland broke all the rules, and things are not too bad….Iceland’s economy is set to grow by 2.7% this year while the eurozone is expected to shrink by 0.3%…” But it’s nasty underneath ! “..collective equity of homeowners aged 31-45 has fallen from +100bn ISK down to -8bn…”

      • Thank you. It was interesting. Does Krugman ever engage in level discussions with anyone with a different view to his own?
        What was striking about this clip was how Prof Schwartz was respectful and paid repeated compliments to Krugman and his work -even recommended reading the book, only for Krugman to attack him for not being respectful enough and then delivering an authoritarian answer. A telling presentation of human behaviour.

      • Krugman couldnt hold his own against a B+ 4th grader.. the fact that this guy has a Nobel prize IMO devalues the whole thing to the point of worthlessness. The fact that Barrack (honest guvnor I’ll close Guantanamo) Obama also has one in his cabinet for peace.. case closed I think

    • But it’s nasty underneath ! “..collective equity of homeowners aged 31-45 has fallen from +100bn ISK down to -8bn…”

      I don’t understand this criticism. Do you expect Iceland to do The Bernanke and re-inflate homeowners equity with more debt pumped into the economy via QE? What exactly is your point?

      Iceland did the right thing and is a model for the rest of the world on how to respond to a sovereign crisis triggered by a private banking crisis.

    • “..collective equity of homeowners aged 31-45 has fallen from +100bn ISK down to -8bn…”

      Isn’t that whole point of a debt writedown vs another can-kick ?

  4. Don’t worry about Lorax. Ignore him, I usually do.

    If Lorax had his way comments would be confined to guilt ridden sandal wearers; Green Left Weekly subscription holders; those with BAs in performing arts; PhDs whose doctoral theses’ investigated marxist economic constructs and their application to resource rich countries; and of course himself and trusty side-kick Mav.

    He’s a natural disciplinarian with strong authoritarian impulses – his world order he believes should be everyones’ world order. Despite this I like the dude – and have ignored his demands that I go away – you do the same!

    Lorax immortalised:

  5. http://www.smh.com.au/opinion/political-news/left-accused-of-keeping-aborigines-in-poverty-20121123-29yrv.html#ixzz2D5YpJBat

    How the Left keep people poor and dependent, stifling real development and opportunity. With taxpayer money.

    “She accuses Labor of taking Aboriginal voters for granted since the days of the Whitlam government but says this changed with the election of the West Australian Liberal MP Ken Wyatt as the first indigenous member of the House of Representatives, and the defeat of the Labor government in this year’s Northern Territory election, largely due to the disaffection of indigenous voters in bush seats.”

    • and they prospered under the Howard Government. Seriously, all sides of politics have failed the Aboriginal people.

  6. So a couple of kids think they’ve found the answer to why people invest in housing, by stating the obvious. Thereby ignoring the thousands of papers that show that the favourable taxation treatment of owner occupation is the major factor.

    They would not be finding a “low return to housing” if they had done their figures four years ago.

    • An interesting article and that link to the paper was also handy.


      But of course it does not really present a problem if you adopt the RBA’s two pronged strategy.

      1. Use low interest rates to encourage fresh entrants at the bottom of the debt pyramid.

      2. Use low interest rates to force savers to subsidise the life styles of those previously induced by the RBA to take on more debt than they should have.

      There is the slight problem of closing in on ZIRP but the RBA would rather that than change direction and thereby expose its past performance/recommendations/assurances for what they were.

  7. Hey, Australia! here’s what happens when all you have left to keep your economy afloat is….property speculation! NZ had it’s mania under control 2 years ago; now ,with a cash rate at 2.5%, (not too far below yours, and where yours is off to?) and no ‘real economy’ left to rely on, debt is the only answer. Don’t let it happen to you! “… sold for $1.175m above valuation…”

  8. HnH, an interesting discussion ensues at FT where Izabella Kaminska reports on the widely supported views of George Magnus (UBS) (think Chovanec, Pettis, Societe General’s Albert Edwards). What makes this column stand apart from the usual bearish hoardings is a return to the work of James White, an Australian analyst, and his refreshing (particularly in the current bearish climate) alternate view presented in The Rise of the Ferro Dollar. I like White’s view and it seems FT considers it has merit too.



    The comments are also worth a look: White, Kaminska and Kate MacKenzie.

  9. Just made my third login, same machine, same browser (FF 17.0).

    There are so many bugs on this site that it’s jeopardising its future, IMO:

    blockquote bug, comment threading bug, login bug.

    Bugs and bots dot com?