Links 11 February 2013

Here’s a list of things Reynard read over the weekend.

Global Macro/Markets:

North America:

  • Housing data a bad omen for Canada’s economy –  Globe Investor
  • Shiller: No Major Rally in U.S. Housing Market – The Big Picture
  • AutoNation’s chief warns of reckoning for autos, U.S. economy – Yahoo
  • Treasury Eases Off on Bank Rules – Wall Street Journal
  • Solving the Sequester: The Facts –
  • Many 2011 federal budget cuts had little real-world effect – Washington Post
  • The “austerity” of 2011-2012 in the United States – Marginal Revolution
  • Automatic budget cuts are almost certain – LA Times
  • Americans Are Tapping Home Equity Again – CNBC


  • Polish Property Prices Plummet –
  • Doubts still on euro zone recapitalization for Irish banks: central bank – Reuters
  • London Home Prices to Increase 31% by Decade’s End, CEBR Reports – Bloomberg





  1. Flaw to blame for mining tax revenue? You’ve got to have a laugh, they had still not correctly identified the ‘flaw’.

    Anyway this segues nicely to my response to CB’s ‘pontification’ on the mining tax last week. Namely, whereas CB asserts the imposition of the tax is to drive behaviour – rubbish – the MRRT is quickly descending into a tax grab directed at the miners. The government does not want to ‘drive behaviour’ away from mining investment and the MRRT is rapidly being revealed for what it is: an unfair tax on a single (and important) sector of the Australian economy.

    More fool for the government for spending the proceeds before receipt.

    • One of my original responses to CB:

      “I doubt many view the imposition of the mining tax as anything other than an opportunistic revenue source, as evidenced by the ‘Show us the Money’ brigade.

      If there is one thing for sure at present it is that the Government will be hoping the MRRT does NOT change behaviours (which was never the government’s intent in any case, although may have been Henry’s back in the day). Indeed I reckon the government(s) wants the boom to never end.

      Changing/regulating behaviour is not the goal of any proponent of the mining tax: extracting maximum revenue is – again look at the proponents hue and cry – ‘tax ‘em more’ they demand! They don’t give fig about changing behaviour, they want the cash”

    • “The government does not want to ‘drive behaviour’ away from mining investment… ”

      Yes – that is exactly right.

      One of the big mistakes made by many observers is believing that the Govts action re mining have something to do with ‘Dutch disease’ or a 2 speed economy or managing the boom.

      Nothing of the sort. The ‘profits tax’ is nothing more than a ham fisted attempt by Mr Swan to get his mitts on lots of cash.

      The biggest mistake they made was trying introduce a ‘profits’ tax. Most people have no objection to more of the value of resources being retained but the idea of a ‘profits’ tax leaves them cold.

      If govt wants to share in the profits it must share in the risks and that is exactly what we don’t want our boofheads doing on our behalf – signing the public up for mining industry risk.

      If Dutch disease is a worry – control volumes via export licenses.

      If more revenue is the objective – crank up royalties or auction and allow a trade in the export volume license.

      I appreciate that cranking up the costs via royalties or export licenses reduces our competitiveness and increases uncertainty for the miners and their desire to dig here but that is the calculation that our representatives are supposed to be making on our behalf.

      Playing hard ball with our resources but knowing if they play ‘too hard’ some miners will go elsewhere because they can’t sell at a price customers are willing to pay and make a decent return for shareholders.

      • I agree. Clearly the MRRT has now been exposed for what it is (or attempted to be based on persistent strong commodity prices) – a tax grab. The PRRT-like writedowns were always anticipated in the first years.

        But the concern now is that the tax will be beefed up for no other reasons than to appropriate mining revenues at the very time we should be welcoming mining investment in Australia – our prime source of foreign capital inflows. Warwick McKibbin was on Sky on the weekend warning against that very thing – yet again more uncertainty for business imposed.

        Leith’s post from last week contains a little more discussion:

  2. Shilling’s 2013 investment themes are a good counterpoint to the growing bullishness for equities and property.