Weekend links 2-3 February 2013

Here’s a list of things Reynard read over night.

Global Macro:

  • A must read from PIMCO’s Bill Gross on the global credit supernova – PIMCO
  • On SWFs being paid to borrow – FT Alphaville
  • A cap and trade proposal… for immigration – FT Alphaville
  • It’s not a collateral shortgage that’s plaguing the global financial system, but a scarcity of capital – FT Alphaville

North America:

  • Top Canadian housing and economic trends to be watching in 2013 – Ben Rabidoux
  • US January payrolls: +157,000, unemployment rate 7.9 per cent – FT Alphaville
  • January Employment Report: 157,000 Jobs, 7.9% Unemployment Rate – Calculated Risk
  • Markit US Manufacturing PMI at 55.8 in Jan (flash 56.1), up from 54.0 in Dec – Markit
  • ISM Manufacturing index increases in January to 53.1, Consumer Sentiment improves – Calculated Risk


  • U.K. Bubble in House Prices Inflates further on BoE Credit Scheme – Business Week
  • Euro area unemployment at 11.7%, EU at 10.7% in December – European Union


  • “China’s campaign of cyber attacks has reached epidemic proportions” – Foreign Policy
  • Stephen Roach: “China’s Last Soft Landing?” – Project Syndicate
  • China to crack down on banks’ Ponzi-style “fund pools” – Reuters
  • “Isn’t the Chinese property bubble obvious?” – International Financing Review
  • China’s steel mills face tax pressure – Financial Times
  • China’s Manufacturing Sustained Expansion in January: Economy – Bloomberg
  • What to make of the contradictory China manufacturing PMIs – FT Alphaville


  • Since Dec 2010, Queensland’s working age population rose by 137 300 people, but employment only grew by 2 400 – Matt Cowgill 
  • Are we destroying our economy by going it alone on carbon pricing? – The Conversation
  • RBA to leave cash rate on hold next week say economists: Bloomberg – Property Observer
  • Could slowing down the pace of coal exports benefit the Australian economy? – The Conversation
  • Why stamp duty needs to go in favour of a broad-based land tax – The Drum
  • RBA weighs-up high dollar on rates – The Age


  • Why GDP Data Shouldn’t Be Interpreted in Ways that Support Keynesian Spending – cato.org


  1. TheRedEconomistMEMBER

    The very unhealthy looking Dr Wilson now has a 10 minute spruik on Channel 9’s Today show at 8.15am on Saturday morning.

    With the headline “House Prices Surge” the punter and the unwary are told over there Weetbix that there is no bubble, buyer activity is increasing, affordibility is improving because people are buying and sentiment has definitely turned… Yadda…yadda….yadda.

    At the conclusion of Dr weary Wilson informercial, the camera’s returned to the hosts. The female compare presented said it is crazy people are prepared to pay $500K for a 1 bedroom apartment … then they showed some decent family homes in Memphis and Georgia for $USD60K – $USD80K.

    I wonder how much APM and Fairfax and the real industry paid bankrupt Channel 9 for the prime time slot.

    I also noted during the week Dr Keen got a run on Switzer.

    • Last night I listed to a podcast by Jack Spirko, survivalist, who detailed his new 3 acre ranch in Texas, complete with 5 bed house and several large steel-framed sheds. Price? $200k. In this country it would be at least 700k.

      Kinda shocking 😯 and depressing. The amount of debt people have here in Oz must be overwhelming, because we don’t earn 3x the wages Americans do.

    • I wonder how much APM and Fairfax and the real industry paid bankrupt Channel 9 for the prime time slot.

      Well, Thats nothing. Property Council paid $$s to whisper sweet nothings into PM’s, Bill Shorten, Can Do and Tony Abbott’s ears..


      The Property Council of Australia’s return revealed it paid $5500 to the ALP for a “boardroom dinner with Prime Minister Julia Gillard”.

      Similarly, the real estate industry lobby paid some $1750 for a briefing with the PM, and some $1980 to join Workplace Minister Bill Shorten for dinner.

      In the PCA return, a similar insight was given into the LNP’s election drive, with the lobby group paying $2000, attributed to a Done Doing Can Do Dinner.

      The PCA also paid the Victorian Liberal Party $1450 for a dinner with Federal Opposition Leader Tony Abbott.

      I guess we will see a change in Super rules to “help” FHBs get into the property market i.e. transfer Super to the baby boomers in exchange for a overpriced home and a mega mortgage debt.

      PS: Even Gina donated $5k to ALP! Must be for that Enterprise Migration Agreement which allows her to bring in cheap foreign workers.. what a great deal, if you can get one!

        • Mining BoganMEMBER

          They’ve already promised to cut superannuation tax breaks for 3.6 million low income earners. I’m guessing if you’re not one of them you will be next in the firing line.

          • “They’ve already promised to cut superannuation tax breaks for 3.6 million low income earners.”


            Indeed, join the club. Become one with others who are fleeced to pay for those “savings” (Swan speak for higher taxes) to fund Govt waste and benefits enjoyed by the fortunate 80% of taxpayers.

            Yet, when some of that earned income is returned to it’s rightful owners, we suffer the bleating lefty screams of “middle calss welfare” from the hypoctrites.

            “ALMOST 13 million Australians file a tax return each year, but only the top fifth of households really contribute to Australia’s vast and complex social-security apparatus.
            For the other 80 per cent, the value of cash welfare payments and social security in kind – health, education and housing, for instance – typically exceeds their total tax payments, even incorporating indirect taxes like the GST and tobacco excise.”

      • Maybe MB’s FHB’s should start a movement, pass the hat around & get access to some of these ministers ears as well…. & hopefully resist doing a Mike Tyson on them!

  2. Money and Sustainability – The Missing Link: Review

    So here we have it. The austerity versus Keynsian spending debate is about as useful as arguing whether the earth is flat or sitting on the back of a pile of turtles. Neither will provide sustainable interventions to our converging crises while the debt-based money system remains the only significant game in town.

    Money & Sustainability is as long as it has to be and no longer. Its 200 page analysis details the adverse impact of the current financial system on sustainability as a root cause of boom and bust cycles. It requires short-term thinking and unending growth, concentrates wealth and destroys social capital


    • Yes an interesting read.

      When high profile people such as Mr Gross are spelling out the problems with our banking system over and over again eventually the penny must start to drop.

      In any other business, if you promised people that if they left their goods with you and you promised to deliver those goods to them without notice AND you knowingly lent 90-100% of those goods to other people GAMBLING that the original owners of the goods would not turn up all at once to claim their goods back YOU WOULD BE RUN OUT OF TOWN AS A CROOK.

      That is what banking is today but worse because if they gamble wrong and everyone does show up – public money is used to make good on their gamble.

      How to fix the problem – which will take time.

      Start cranking up the reserve requirements by 5% a year for the next 20 years until it reaches 100% reserve backing.

      So you ask how can a bank then make any loans?

      Easy – accept deposits for fixed terms. 6 months, 1 year, 5 years, 10 years etc and then lend that money out for terms that match the terms of the deposits with an interest margin for costs of doing so.

      Any deposits made at call cannot be lent out and the depositor will pay a small fee for the security of a bank vault and the use of their payments systems.

      The idea that we leave so much control of the money supply in the hands of the banking system has passed its use by date.

      What is the single biggest argument that banks rely on to stop actions such as those outlined above?

      “We will be unable to compete with foreign banks and we – Australia – will never become an ‘international centre of finance'”

      That is very true – lending money multiple times does increase bank profits which allows them to hand some back to the customer to provide a ‘cheaper’ service that attracts more business.

      Simple – if our banks want to play off shore with the vampire squids move off shore.

      Banks local or foreign that want to operate in Australia play by our new banking rules.

      Of course this means the govt will need to take much more direct control and responsibility for the money supply but at least they are accountable to the public.

      • We may find that somewhere on the way to 100% reserve requirement that the ‘problem’ with banks has reduced to a point we are comfortable with.

      • Sorry to be the one to cast a pall of pessimism over these valid and worthy suggestions. Alas, it is my sense that the bankstering system has too much power for effective “reform” to be a realistic option any longer. My hope is in undermining and eventual replacement, by grassroots-driven alternatives.

        Just as has been the tendency throughout millennia past, when monolithic control over “money” (thus, over everything) has ultimately imploded under the weight of its own corruption.

        • True – it is a difficult challenge but remember that most people are suspicious and sceptical of banks.

          Largely they just cant put their finger on why.

          I think we over estimate the power of corporate spin and underestimate the power of ideas spread through the community.

          It takes time of course but 10 years ago we would not even have been able have the discussion, read Mr Gross article and others like it as easily as we can today.

          The community are just starting to learn that they can find out the truth themselves and participate in the debate.

          There is room for cautious optimism.

          After all most people would be shocked to find out there is no reserve requirement for Australian banks. We have a fraction-less banking system.

          5% each year for 5 years gets us to 25%.

          That would be a good start.

      • public money is used to make good on their gamble

        If you want to hear a cogent spray about this from yesterday, try Danielle Park (my favorite deflationist commentator)

        Download / Listen

      • hubris_and_hyperbole

        Gross hasn’t made much sense over the last few years and this article is just another example.

        “… our fractionally reserved credit system which characterizes modern global finance…”

        How many times do we have to keep reading junk predicated on reserve constraints (fairy tale) rather than capital constraints (fact)?

        If Gross believes that something needs fixing he first has to understand how it works. His article shows he hasn’t reached that level yet. He really needs to do a Steve Keen 101 level course on how the banking system works.

        When he passes that course he could move on and examine credit velocity and acceleration (Steve Keen 201) which would help him stumbling around trying to relate credit to GDP.

        • Anonymous Internet Guy accuses man who runs a $270 Billion bond fund of not making financial sense and knowing nothing about the banking system!


          • Anytime someone mentions reserves or fractional banking a MMT angel dies.

            They get very excited about the amazing insight that a bank can write a loan without a deposit.

            Eventually, that bank will need to honour cheques drawn on that loan account and will need funds to meet the cheque (possibly even some cash) whether or not they actually have the funds or they are in an account with a central bank or they have to go to the market and borrow them. And yes in many jurisdictions the loan book is limited by measures related to capital and risk.

            Nothing about that would prevent the reintroduction of a reserve requirement.

            Though on reflection considering how big our big 4 zeppelins have become 1% per year for 10 years might be more realistic.

          • You have a point, it’s a safe bet that nobody posting here will measure up to Mr Gross when it comes to money management. But I found myself thinking the same thing as hubris and hyperbole (should be hyperbowl here btw) reading the article.

            Of course, the likely explanation is that Gross knows exactly how it all works, but has no need to rock the boat while he’s talking his book…

          • hubris_and_hyperbole


            no, anonymous intenet guy who seems to post so many comments here for attention ignores that Keen is right and instead offers equivalent of appeal to authority.

            Yeah bloke running multi-billon fund must be right. I guess you thought the boss of multi-billion AIG knew more about insurance and CDS in 2008 than silly bloggers too! etc. LOL


            Keen is not an MMT practitioner — AFAIK rejects much of their stuff. In any case straw man by you. The absence of FRB is fact — I know this this bothers those whose ideology rests on ranting about FRB but it doesn’t exist.

            “Eventually, that bank will need to honour cheques drawn on that loan account and will need funds to meet the cheque…”

            um. thanks for that. What part of “capital constraints” in my comment didn’t you get? 😉

            Additionally re: Gross

            He has written much about bonds in the last three years. **If** he has been putting his money where his mouth is he would have had his head handed to him on a plate.

          • No, not an “appeal to authority”, an appeal to track record. PIMCO has $1.92 trillion in assets under management. Gross leads PIMCO.

            I have to decide to listen to him or you, an Anonymous Expert.

            Hard choice! 🙄 🙄

          • Hubris&Hyperbole,

            I will cop that – I should have processed your reference to capital constraints on banking lending and left you out of my poke at MMT.

            I hope that MMT angel pulls through!

            And yes I am aware that Dr Keen does not subscribe to MMT in full – though I think it is the other way around. MMT do not accept him as a true believer.

            I am not sure whose ideology rests on ranting about FRB, but suffice to say I think it is a mistake to rely on the banks they way we do and that ‘capital constraints’, risk weighting etc are NO substitute.

            As we can see around the globe and the failures of Basel the banks will just run rings around the regulators trying to make sure they have not come up some cute strategy to side step the constraints.

            Bring back FRB!

          • hubris_and_hyperbole


            It is not a matter of increasing reserve requirements, even to 100%, to make banking better. At the moment there is $1.7 trillion in excess reserves held by banks in the USA. So if you increase their reserve requirements the excess reserves become required reserves but nothing changes, i.e. the reserves are already there in the system. If there is a problem that needs to be fixed it needs to be done with the capital requirements and enforcement, not reserves.

            The reason why debunking beliefs in FRB is important is because FRB goes lockstep with a belief in loanable funds. These beliefs ultimately give rise to a belief that private debt bubbles are no big deal and we know where that got us. The alternative is the Keen-sian approach which recognizes that FRB is fantasy and that money is created endogenously. When you understand that then you ultimately recognize that private debt bubbles are bad. I know which theories I would have preferred central bankers to be using over the past decade.

            As for the appeal to authority guy — Gross made a lot of money during a 30 year bull market in bonds. When the GFC came about he had to draw on his economic beliefs to predicts what the bond market would do and he was flat out wrong in his predictions. Having said that his misreading of the bond market, and his prior success for that matter, really has nothing to do with FRB.

            And we have this quote from Gross which presumably R2M would stand by but I suspect most readers here would laugh at:

            “Move money to currencies and asset markets in countries with less debt and less hyperbolic credit systems. Australia,…”

            1. Australia has zero reserve requirements so if you believe that FRB exists, which Gross states that he does, then Australia is infinitely hyperbolic, not less.

            2. It hasn’t been my intention to bat for Steve Keen repeatedly but again I must mention that he has charts that show the levels of debt in Australia, USA etc. Our debt/credit problems here are just as bad as the USA. Gross clearly hasn’t bothered to do any research.

            …and so on. Really poor article — but one apparently destined to impress those who blindly accept anything a rich guy writes.

          • Anonymous Guy, I do think Gross underestimates total debt here. He’s looking at government debt, in terms of the currency’s stability.

          • Hubris,

            It is the orthodox banking system and economic theory that doesn’t like reserve requirements (FRB). Why? – they don’t like limits on their power to endogenously create money and they don’t think debt matters. Not the other way around.

            You are barracking for the wrong team as I suspect we are in furious agreement re need to revisit the prevailing approach to banking.

            Sorry I don’t follow your argument as to why requiring banks to hold greater reserves against loans is not effective but requiring them to maintain some ratio between their capital and a complex calculation of the risk of the assets would be an improvement.

            Banks much prefer ‘capital adequacy’ ratios because they are complex, opaque, depend on regulator vigilance and are easy to ignore and plead ignorance if you get caught out.

            I think you are missing the point that you cannot create money endogenously if you cannot transform maturities. And you can’t transform maturities with 100% reserve requirements.

            All you can do is create loans that closely match the maturities of the deposits you have received.

            For deposits at call you cannot use them for loans at all unless those loans themselves are at call. That is why depositors at call would have to pay a fee for access to a bank vault and a convenient system of ATMs.

            For example:

            100% reserve banking: Mr Pink goes to the bank and seeks a loan of $10,000.00 for six months. The bank cannot make the loan UNLESS they have received a deposit of an amount that is not due to mature for at least 6 months.

            Naturally, this restriction does not currently apply to banking which is how endogenous creation operates. The bank makes some accounting entries and woopee some money has been created. Though, of course, the bank may need to do something within a regulated period depending on capital adequacy requirements or if it is in a jurisdiction that still requires some reserve requirement.

            Perhaps it is confusing to refer to 100% reserve requirements as FRB as 100% is never a fraction. However, gradually increasing the required reserves from 0% towards 100% will greatly cramp the banking systems style.

            China uses this approach as a routine measure to control credit creation (I think they are currently at about 20% – they alter the ratio regularly)

            When there is a 100% reserve requirements there is generally little role for a Central Bank as the purpose of central banking is largely to provide a backstop for the endogenous money creation activities as banking as we currently understand it.

            Certainly, 100% FRB banking has appeal to some economic tribes because they don’t like central banks and don’t like big government but that is not an argument against 100% FRB.

            Sure there is a simple alternative and that is to go back to the days of letting endogenous money creating banks fail when they misjudge how much money they create and a run occurs but that sort of brutalist finance model should not be encouraged due to the economic disruption and unnecessary hardship it produces.

          • In summary – 0% FRB with Central Banking is pure orthodoxy.

            Capital adequacy ratios is the BANKS idea of compromise because they can game it. Note the games they have been playing with Basel 3 (give us chastity but not yet).

            A better idea is to put the banks back on the choker collar of FRB and keep tightening until they heel.

            If we find we need to go back to 100% Reserve requirements so be it.

          • hubris_and_hyperbole


            “It is the orthodox banking system and economic theory that doesn’t like reserve requirements (FRB). Why? – they don’t like limits on their power to endogenously create money and they don’t think debt matters.”

            For goodness sake reserve requirements don’t limit banks power to create endogenous money. That is the whole point of why FRB is a myth. Until you get that we will be just talking past each other so I’ll keep it short. They are capital constrained. You argue that the capital constraints are complex, opaque etc. That is a matter of opinion, but nevertheless these are the actual constraints to money creation not reserves. If you don’t like the complexity/opacity of current rules then shouldn’t your argument be about making them more transparent rather than solutions to the non-problem of reserves?

            Bottom line is that you and I probably see a similar credit problem. But you are an asset man and I am an equity man. You want to treat it as an asset (reserves) problem whereas it is currently an equity problem (capital) and IMO should remain so but agree with you about transparency.

          • Yes, It is apparent from your responses that you have not thought about a word I have written.

            Your responses are a series of non sequiters.

            The hallmarks of MMT.

            Perhaps that Angel did die after all.

          • hubris_and_hyperbole

            I have considered what you’ve written but you’re dealing with theories and fantasy — particularly when you claim that ramping up reserves is a solution to something. It is not insufficient reserves that are a problem — said this a few times but the penny hasn’t dropped. I’m trying to get you to deal in facts.

            Claim: 0% FRB is orthodoxy

            0% FRB is not orthodoxy at all. Australia is one of only a few countries have have zero reserve requirements and economics textbooks teach (>0%) FRB.

            statement: bring back FRB

            US banks have 15 times more reserves than they are currently required to hold — So in other words at the stroke of a pen you can increase reserve requirements 10 fold, a little guy at the Fed types on his computer and excess reserves get transferred to the required reserves column and nothing changes in terms of credit creation (reason: reserves have nothing to do with it — they are already there in the system). Thus the current situation in the US provides a good test case of any claim that more reserves are required in the banking system (as opposed to “proper” capital regulations)

        • I think Gross perfectly understands so-called ‘credit velocity’ (a misnomer) and acceleration. Hubris, I think you have missed the point. Gross wasn’t talking about short term banking problems but the limits imposed by a real world with real limited resources.
          You would not be alone in not being able to relate the real world to economics…99.999999999999999999% of economists and commentators are in the same boat.

    • Downright depressing read!

      ‘We ask ourselves frequently at PIMCO, what else could we do, what else could we invest in to avoid the consequences of financial repression and negative real interest rates approaching minus 2%? The choices are varied: cash to help protect against an inflationary expansion or just the opposite – long Treasuries to take advantage of a deflationary bust; real assets; emerging market equities, etc. One of our Investment Committee members swears he would buy land in New Zealand and set sail. Most of us can’t do that, nor can you. The fact is that PIMCO and almost all professional investors are in many cases index constrained, and thus duration and risk constrained. We operate in a world that is primarily credit based and as credit loses energy we and our clients should acknowledge its entropy, which means accepting lower returns on bonds, stocks, real estate and derivative strategies that likely will produce less than double-digit returns.’

      If informed people are talking about buying land in NZ and setting sail (no disrespect to the Kiwis – its a great place) and the great mass of punterdom is still in ‘Never been a better time to buy mode’ you sort of know it is simply a matter of waiting

  3. ‘Just the Beginning’: US Drought Kills Hundreds of Thousands of Trees
    Persistent lack of water continues to ravage US, threatening trees and crops nationwide, with no end in sight



    The “corporate bill mill” that is the fossil-fuel-funded American Legislative Exchange Council (ALEC) is alarmingly busy: It’s pushing bills mandating the “balanced” teaching of climate science – the hilariously named ”Environmental Literacy Improvement Act“ – in public schools in Oklahoma, Colorado, and Arizona in addition to the 11 states it’s already invaded.


    • In case you missed the point of my post: ALEC wants denialism taught in schools on an equal footing with climate science; meanwhile the US is in the grip of an AGW-fueled megadrought.

      Rich, rich irony.

      • That cannot be proved. I’m for conservation in many forms but attributing every abnormal weather occurrence to AGW just defeats the argument. When you see that you know there is another agenda running…mainly government money. You might do well to have a look at the sun’s activity as well as our own.
        Not everyone who calls into question some of the baloney that has been put forwards as ‘climate science’ is a ‘denialist’ in terms of your portrait of such a person.

        • attributing every abnormal weather occurrence to AGW just defeats the argument.

          This has been discussed in the popular press numerous times. No one particular event can be tied to AGW, but statistically these events are now far more frequent as a result of AGW. This is well accepted science. Please peddle your denialist claptrap elsewhere.

          Sun’s activity? lol, that’s a debunked furphy. See http://www.skepticalscience.com/argument.php

          • When your theories are proven R2M you may get some traction.

            Instead, you will simply have to settle for the facts that clearly show AGW as a theory is very flawed. The IPCC’s own data shows it’s modelling to be hopelessy wrong as this graph (Figure 1.4, draft of IPCC AR5)
            clearly shows. Those 2 “observed” dots in 2012 on the IPCC graph are observed data well BELOW the range the IPCC has been scaring the planet with for years;


            This also fits with the UK Met office asertions that no change in temps have been observed for 16 years or likely for 20.

            The question is, when will the Alarmists give up with peddling this obvious hoax?

          • AGW as a theory is very flawed

            Just like evolution as a theory is very flawed, huh? And there’s no direct link between smoking and cancer?

            Or has your side given up on those two, because the money is now in “marketing doubt” (see Naomi Oreskes book, Merchants of Doubt).

          • Just keep reading only things that agree with yo; Interpret every event in terms of your own bias…that way you will always be right.

          • Flawse gibbered: “Just keep reading only things that agree with you”

            You mean I should keep reading what the world’s entire cohort of climate scientists is saying, and ignore the antiscience crowd? Okay, will do, gotcha.

            You keep reading Jo Nova (a non-scientist from Perth), or Anthony Watts (a college dropout), while I’ll take note of what every major scientific body that agrees with AGW is saying, including:

            American Association for the Advancement of Science
            American Astronomical Society
            American Chemical Society
            American Geophysical Union
            American Institute of Physics
            American Meteorological Society
            American Physical Society
            Australian Meteorological and Oceanographic Society
            Australian Bureau of Meteorology and the CSIRO
            British Antarctic Survey
            Canadian Foundation for Climate and Atmospheric Sciences
            Canadian Meteorological and Oceanographic Society
            Environmental Protection Agency
            European Federation of Geologists
            European Geosciences Union
            European Physical Society
            Federation of American Scientists
            Federation of Australian Scientific and Technological Societies
            Geological Society of America
            Geological Society of Australia
            Geological Society of London
            International Union for Quaternary Research (INQUA)
            International Union of Geodesy and Geophysics
            National Center for Atmospheric Research
            National Oceanic and Atmospheric Administration
            Royal Meteorological Society
            Royal Society of the UK

          • JamesTheBearMEMBER

            So here’s a climate scientist, James Annan – http://en.wikipedia.org/wiki/James_Annan

            He has a new blog post at http://julesandjames.blogspot.com.au/2013/02/a-sensitive-matter.html where he states that the IPCC have been overstating climate sensirtivity. He’s not a denier, in fact he’s been one of the band of scientists that have got us to where we are today, where most otherwise sensible people go around believing we are destroying the planet, and that New York is going to be under 100 metres of water by the end of the century …

            So we are starting to see that even on that side of the camp, they are starting to move closer to the sceptics view – there is warming, it’s not runaway, it’s not catastrophic and we can adapt.

          • Another rather desperate and poorly understood attempt to seize on complex debate between scientists to “prove” AGW is either not real, or not worth worrying about, and certainly not worth interfering in the mining industry for 🙄

        • desmodromicMEMBER


          What ‘forms’ of conservation are you for? The type that maintains functioning ecosystems that sustain us or the type that aims to stuff things up more slowly. In Australia, we mostly practice that latter form and we do that poorly. Witness the difficultly in getting sensible outcomes for the Murray River.

          Which government are you concerned about? In recent years, all my research funds come from government funded bodies in the USA and those funds are spent in Australia. I imagine there would be an outcry here if the situation was reversed.

          What conceptual framework, measuring stick or belief system do you use to measure ‘baloney’? Science mostly works on ‘weight of evidence’ rather than proof. Hence, there is plenty of room for disagreement until the weight of evidence gains acceptance in the scientific community. For example, little in the world can be understood without Darwinian evolution. Although some still try!

          • Why do people who want to criticise me always quote denial or Darwin’e theory?

            I am/was a scientist in my younger days.

            To claim that some of the stuff that has been put out by the AGW is responsible for everything is not baloney is just ridiculous. Even the originators of some of it admit to same. The deliberate destruction of original data is about the most unscientific thing one can do. Yet that behaviour is acceptable?

          • Why do people who want to criticise me always quote denial or Darwin’e theory?

            Because the methods and structure of “arguments” – and development of same over time – of climate change deniers are basically identical to those of creationists.

        • That’s why no thinking person can vote for a conservative party in Australia. Period.

          Tony “Global warming is Crap” Abbott should be tarred and feather and run out of town on a rail.

    • E3M ? With a helicopter? Either his wealth is a misprint or he was running an operation destined to fail

  4. Good grief. The Conversation will soon have to be renamed the 30 Second Read – so many articles lacking depth and serious analysis, so many articles little more than academics’ personal hobby horses.

    Richard Denniss’ tired old ‘slow mining’ one trick pony article from TC – a re-hash from multiple earlier articles and the team was further dismayed to discover Denniss’ co-author possessed the usual green credentials, this time Beyond Zero Emissions. And together they write an anti-mining anti-coal article? What a surprise.

    How misinformation presented as fact can be published under the masthead of the ANU is a joke. Reflects poorly on level of academic rigour expected by one of Australia’s leading universities.

    Mod(CB): first and last warning – do not misrepresent MB’s views on an article. State your own views/criticism – right or wrong, since you are completely anonymous – but don’t try to astroturf others with an air of authority.

    • While the two speed economy story is very debatable, in that the current exchange rate appears to have a lot more to do with speculative capital than mining, the issue of the speed of mineral resource extraction is legitimate.

      Generally, i have been persuaded by the idea of making hay while the sun shines and before new supply of minerals etc ramp up around the world.

      However, if the speed of development is actually causing dislocation or we are concerned about spreading the earnings from extracting our natural endowment over a number of generations, then some way of limiting the speed of extraction is warranted.

      Auction rights to export volumes during a defined period is a very simple and flexible approach.

      What the volumes should be can be open to debate and analysis.

      It allows our efficient and world leading mining industry to determine the best projects and what the extraction rights are worth.

      Probably could avoid secret MMRT and weird science super profit taxes.

      • Pfh, proposals like auction and almost anything Denniss comes up with tend to be predicated on perpetual boom. Resource commodities have always been subject to cyclical swings which in effect over time are the ‘management’ some deem desirable.

        It is illustrative to note that the founders of Dutch Disease theory have adjusted their understanding of the phenomenon as understanding (or not) has developed – now in the ‘go lightly’ school seeing that the natural cycle tends to take care of most concerns.

        It remains that post the biggest mining boom in our history combined with record ToT, we as a nation have little to show for it – successive governments have spent the lot!

        Many confuse the inadequacies of government management with the legitimate activities of the miners, may hay while the sun shines – but squirrel something away…

        • Agree with that.

          To put it another way an export volume auction approach is the least worst way of dealing with economic dislocation, if there is any, due to a boom or unusually extreme prices.

          During the boom it would limit the total volume of mining activity and the share of boom time prices returned to the public purse would only be as much as the miners are PREPARED to bid for the right to bring the ore to market during the period of the permit.

          If the miners don’t think there is much value in the permits they won’t bid much.

          Certainly, there would be risk involved in making a bid as miners would not like to bid high and then find the price falls. But that sort of risk assessment is standard fare for the mining industry.

          When the boom is over (or the miners believe it is on the way out) the amount bid for the rights would drop (probably dramatically) to the point they may only be a marginal addition to the state royalties.

          State royalties will not present a problem as the miners will bid taking the royalties into account.

          The mechanics of course would need to be worked out (because there is a lot of investment that has already gone on) but the auction approach is much superior to the wacky concepts behind the super profits tax or even the defective MMRT (whatever it is).

          But like I said, it all depends on whether:

          1. Mining is causing dislocation in the economy (exchange rate, skills shortages) and I think that is debatable. As many have noted the exchange is not responding to terms of trade.

          2. Keeping resource in the ground for future generations is an issue. As ‘explorer’ noted the other day it is arguably better to dig it up asap while the prices are good and convert it into more mobile assets.

          One question is why hasn’t Mr Swan thought about this ‘volume permit’ approach?

          Probably just greed.

          Why limit yourself to the results of a market based auction of limited volume that is limited to the industry’s judgment of what the permits are worth when you can try to grab a chunk of unlimited volumes or even more bizarre a share of ‘profits’.

          If the govt wants a share of profits they should set up their own mining company and dig the stuff up themselves and sell it.

          That would be amusing.

        • It remains that post the biggest mining boom in our history combined with record ToT, we as a nation have little to show for it – successive governments have spent the lot!

          Just for laughs, can you give us the percentage of revenue generated from the mining boom that’s gone into taxation over the last twenty years ?

          Methinks it will be dwarfed by the share that’s gone into private – and particularly foreign – hands.

          • “it will be dwarfed by the share that’s gone into private – and particularly foreign – hands.”

            Actually I think much of the profit has been ploughed back in here which makes the foreign ownership more of a problem not less.

            Nevertheless WE made the decision long ago that we would rather consume than invest in our own resources. We WELCOMED the foreign investors and signed legal agreements with them just so most of us could sit on our a..ses in comfortable coastal areas, drive our European cars and generally live beyond our means. Now it is all teh fault of those terrible people ‘miners’ The Australian ones are particularly evil.

            Now you sit in Sydney or Melbourne producing nothing and rant against mining companies who help generate the wealth to keep you.

    • Chris – apologies, it was tongue-in-cheek. A bit sad it did not represent the MB view 😉 Will not re-offend.


  5. PIMCO
    “The choices are varied: cash to help protect against an inflationary expansion or just the opposite – long Treasuries to take advantage of a deflationary bust; real assets; emerging market equities, etc. ”

    Hmmmmmmmmm am I missing something?
    Cash against inflationary expansion? Deflation surely you’d be in Cash or long Treasuries?
    Inflation you’d be in Real assets, Gold etc?

    Emerging market equities? I guess if your currency is about to fail?

    They’re all questions…maybe I am missing something about the cycle.

    • Inflation out of China as a result of demographics, prosperity and, possibly, power will be the trigger for the implosion…unless we ignore inflation, as we do now, and go on looking for a bigger implosion.

    • It’s not normally like you to be posting information about extreme weather events indicating climatic instability.

      Has your account been hacked?

      • Or was it this comment under it that you are reporting on

        “Michael Meyer says:
        February 1, 2013 at 1:25 pm
        God controls the weather and the climate. Man could not change the weather for a single day if he tried, much less the climate over a period of centuries. “Climate Change” is just a scam to tax Americans into a third world country..”

      • Ice in the Arctic isn’t extreme. And the point is, here again we see alarmist propaganda – melting ice caps – having no substance. Just another alarmist lie exposed.

        The latest propaganda scare tactic of the alarmists=Extreme Weather.

        • You’re right, Arctic ice isn’t extreme, but the article you linked to want talking about the presence of ice in the Arctic it was saying that ice is growing at record rates.

          This is an example of climatic instability and this directly undermines your own argument. I mean if you can’t see this then you have no business at all posting any thing about climate science.

          • I you really want top educate yourself about it then take you noobie questions about climate science to a proper forum where you can ask a subject matter expert.

            If you want to keep demonstrating your ignorance here, by all means – continue.

          • Your studied blindness to the simple observed reported facts is apparent to anyone who reads your collective green inspired drivel here. AGW is going nowhere, except in reverse. Even your icons (Gore) are being shown up for the corrupted breed they are.

            flawse has you pegged exactly right; a pompous condescending academic office dweller. All the hallmarks of a PS parasite.

          • doc,
            flawse has you pegged exactly right; a pompous condescending academic office dweller. All the hallmarks of a PS parasite.

            Just makes the fact you’re both completely wrong all the more comical.

          • Those bloody scientists!

            Can’t they get it right!!!

            The IPCC should be ashamed, with such poor projections 👿 😈

    • We can see how Japan keeps its unemployment numbers down. How many handlers to catch that runaway “zebra”?

  6. Claims of economic dislocation caused by mining to other sectors are vastly overdone. Mining investment has played an important role in ensuring Australia has not yet faced the very real dislocation experienced for some years now in many other developed economies. The AUD appears free-floating in every sense! Certainly no longer tied to commodity fundamentals. Economies are dynamic beasts and change is to be expected. Australia does not have the economic framework it did in the 1930’s or 1960’s and nor should it. Domestic economies are not static. The global economy is unrecognisable from even a couple of decades ago. Global interconnectedness via financial instruments, technological change and global migration suggest strength is to be found in fluidity and adaptation – the evolution continues.

    On the face of it it would appear the auction proposal may require Constitutional change? The Australian Constitution grants mineral rights to the States (effectively ceding/vesting ownership of minerals from Commonwealth to State) hence the Royalty mechanism employed by the States. The Royalty regime has worked for better or for worse for many decades and remains an important income stream to State governments. Resource rich States are highly unlikely to forgo this revenue independence and could be expected to vigorously defend the rights granted to them under the Constitution. Amendments to the Constitution are difficult to say the least.

    The auction proposal potentially presents a ‘double-blind’ to miners. As you correctly note “there would be risk involved in making a bid as miners would not like to bid high and then find the price falls. But that sort of risk assessment is standard fare for the mining industry” however such risk is compounded by the need to bid (a cost) in the first instance and the substantial infrastructure investment required following a successful bid (a cost) – the ‘unknowns’ or ‘uncontrollables’ (commodity price/demand) are challenging enough without burden of a second guess at a second guess! All that and royalties too.

    Keep the stuff in the ground? I tend to favor responding to the market. If Grantham is proved correct we are sitting on the Dragon’s Hoard. As an Australian I regret we have failed to adopt a more holistic forward thinking approach to the way the stupendous windfalls to government coffers have been expended – as Flawse says – we’ve bought a lot of trinkets.

    The MRRT is wacky. Applicable to io and coal only, based on a melange of the wacky concept of super profits crossed with PRRT. It is the hybrid child of its parental conception!


    • Cheers,

      There may be a constitutional issue – I can’t quite remember how state royalties mix with the federal powers below

      51(i) trade and commerce with other countries, and among the States;

      51 (iii) bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth;

      Law being law the above could mean anything in the hands of the judiciary!

      In any event, if there is a constitutional issue I have no issue with leaving the issue (and the revenue) in the hands of the States rather than have the Federal govt use the corporations law to endlessly expand its areas of influence.

      I think there is considerable merit in encouraging some independence and diversity amongst civil administrations so that good government in one state can be an example to the others. Likewise bad government.

      Financial independence makes it more likely the States will behave like grown ups.

      A broad based land tax would be the ideal mechanism to allow state governments more financial freedom but the idea of being responsible for collecting tax and the heat that comes with it seems a bit frightening to many of them – they seem to like Canberra as the main tax man.

      When hunting around for some info on royalties I came across this that I thought you might enjoy. Some issues in the sub-continent that sound familiar.


  7. After nearly 2 years this paper gets out, and is causing a stir;


    “THE world’s great forests have long been recognised as the lungs of the earth, but the science establishment has been rocked by claims that trees may also be the heart of its climate.
    Not only do trees fix carbon and produce oxygen; a new and controversial paper says they collectively unleash forces powerful enough to drive global wind patterns and are a core feature in the circulation of the climate system”



    New Scientist;


    “Co-author Douglas Sheil at Southern Cross University in Lismore, Australia, says critics have yet to explain why they think Makarieva is wrong. Until they do, he said, “this looks like a powerful mechanism that governs weather patterns round the world”.

      • des,

        New Scientist thinks this is significant;

        “Judith Curry of the Georgia Institute of Technology, an author of the standard textbook Thermodynamics of Atmospheres and Oceans, is encouraging. “The process they describe is physically correct,” she said. “The main question is its relative magnitude compared with other processes.” She thinks it could explain why climate models do not get monsoons and hurricanes right.”

        Climate modelling flaws explained?

        “The implications are huge. “In standard theories, if we lose forests the rainfall in the continental interiors generally declines by 10 to 30 per cent. In our theory, it is likely to decline by 90 per cent or more,” says Sheil.”

        Planting trees, by the millions, has the potential to make deserts green again according to the report, due the change effected on wind and weather patterns.

        From reading the material, my understanding is that this systemic effect of forests , rainfall and winds was previously thought to be minimal in the overall global climate mechanism. This study is saying, I believe, that that this effect is very significant and has been overlooked/minimised in the past. The study inicates that this effect is in fact a major driver in global climate.

        To me , this indicates again that so much has yet to be fully understood about the Earth’s climate, what effects it and how it actually works, it is folly to blindly accept AGW as anything but UN-settled.

          • “Anti science”?

            On the contrary R2M, the continuing observed data and science is refuting the AGW alarmism at almost every turn. So much so that I am waiting for the next episode in the scary AGW saga of propaganda to be rolled out.

            Do keep us informed?

    • Well said GSM. There’s virtually no evidence the planet is even warming more (or less) that it used to do over the past few thousand millennia, and even less evidence (i.e. zero) that it is caused by human activity. The alarmists seem to want to completely discount all the natural forces that have been causing the climate to change for millions of years, as if they all suddenly went away!

    • Thanks Pfh007.

      Very interesting article.

      “Why are the Nordic countries doing this? The obvious answer is that they have reached the limits of big government. “The welfare state we have is excellent in most ways,” says Gunnar Viby Mogensen, a Danish historian. “We only have this little problem. We can’t afford it.”

      Notably, Swedens recovery in the 90’s began when they chose to begin implementation of more sensible policies in public expenditure , welfare and lowering tax rates;

      “Sweden has reduced public spending as a proportion of GDP from 67% in 1993 to 49% today. It could soon have a smaller state than Britain. It has also cut the top marginal tax rate by 27 percentage points since 1983, to 57%, and scrapped a mare’s nest of taxes on property, gifts, wealth and inheritance. This year it is cutting the corporate-tax rate from 26.3% to 22%.”

      Although still higher than Australia’s, their expenditure and taxes are heading in the right direction and the Swedish economy is clearly benefitting from it. The Swede’s are seeing the light, right enough.

      • The Swedish government spending as % of GDP has been the same for about 7 years.


        So much for “heading in the right direction”.

  8. Other aspects of the article also worth noting GSM.
    Such as:
    And the Nordics are coming up with highly innovative solutions that reject the tired orthodoxies of left and right.

    The second reason to pay attention is that the new Nordic model is proving strikingly successful. The Nordics dominate indices of competitiveness as well as of well-being

    • Take your points Goldilocks. The article also though does point out that Sweden and the Nordics are still very much of the Left. The Left is where “one size fits all” a fallacy even they have come to recognise. The encouraging part is where they are acknowledging the individual has precedence , not the state.

      “The Nordics dominate indices of competitiveness as well as of well-being”…. While we need to be more competitive, we hold our own in the well being stakes.

      It’s a good story.

  9. “Point to just one peer reviewed paper in a major journal that refutes the “theory” of AGW ” – R2M.

    Some peer reviewed papers supporting skeptic argument against AGW alarm;

    CO2-induced global warming: a skeptic’s view of potential climate change (PDF)
    (Climate Research, Volume 10, Number 1, pp. 69–82, April 1998)
    – Sherwood B. Idso

    Cosmoclimatology: a new theory emerges (PDF)
    (Astronomy & Geophysics, Volume 48, Issue 1, pp. 1.18-1.24, February 2007)
    – Henrik Svensmark

    Atmospheric Oscillations do not Explain the Temperature-Industrialization Correlation (PDF)
    (Statistics, Politics, and Policy, Volume 1, Issue 1, pp. 1–18, July 2010)
    – Ross McKitrick

    Empirical evidence for a celestial origin of the climate oscillations and its implications (PDF)
    (Journal of Atmospheric and Solar-Terrestrial Physics, Volume 72, Issue 13, pp. 951-970, August 2010)
    – Nicola Scafetta

    What Do Observational Datasets Say about Modeled Tropospheric Temperature Trends since 1979? (PDF)
    (Remote Sensing, Volume 2, Issue 9, pp. 2148-2169, September 2010)
    – John R. Christy, Benjamin Herman, Roger Pielke Sr., Philip Klotzbach, Richard T. McNider, Justin J. Hnilo, Roy W. Spencer, Thomas Chase, David Douglass

    On the recovery from the Little Ice Age (PDF)
    (Natural Science, Volume 2, Number 7, pp. 1211-1224, November 2010)
    – Syun-Ichi Akasofu

    A statistical analysis of multiple temperature proxies: Are reconstructions of surface temperatures over the last 1000 years reliable? (PDF)
    (Annals of Applied Statistics, Volume 5, Number 1, pp. 5-44, March 2011)
    – Blakeley B. McShane, Abraham J. Wyner

    Improved methods for PCA-based reconstructions: case study using the Steig et al. (2009) Antarctic temperature reconstruction (PDF)
    (Journal of Climate, Volume 24, Issue 8, pp. 2099-2115, April 2011)
    – Ryan O’Donnell, Nicholas Lewis, Steve McIntyre, Jeff Condon

    Lack of Consistency Between Modeled and Observed Temperature Trends (PDF)
    (Energy & Environment, Volume 22, Number 4, pp. 375-406, June 2011)
    – S. Fred Singer

    On the Observational Determination of Climate Sensitivity and Its Implications (PDF)
    (Asia-Pacific Journal of Atmospheric Sciences, Volume 47, Number 4, pp. 377-390, August 2011)
    – Richard S. Lindzen, Yong-Sang Choi

    Climate physics, feedbacks, and reductionism (and when does reductionism go too far?
    (The European Physical Journal Plus, Volume 127, Number 5, pp. 1-15, May 2012)
    – Richard S. Lindzen

    In all, 1100+ here;

          • Lots more similar links where those came from. I use sceptical science because there’s always the chance that one of your neurons will connect with another, and you’ll start reading the whole site, and get an idea. 💡

            I notice you avoid addressing the content of the links. 🙄 Figures.

          • Anyone with neurons firing avoids alarmist sites like SS. Not surprises you get all your ‘information’ from there, lol!

        • Yes Greenfyre and Skeptical Science have been a laughing stock for years. Did you miss the rebuttals section on the list?

          Rebuttal to Greenfyre – “Poptart gets burned again, 900 times”


          “Greenfyre continues his dishonest and desperate attempt to attack the Popular Technology.net peer-reviewed paper list with the same lies, misinformation and strawman arguments that have all been refuted ad nauseam. He is so dishonest he refuses to even make corrections to things that have been shown irrefutably not be true.”

          More on Greenfyre,

          The Truth about Greenfyre


          “Greenfyre is the Internet blog and screen name for a radical environmental activist, Mike Kaulbars from Ottawa, Canada. He is a founder of the Earth First! chapter in Ottawa, Canada, an eco-terrorist organization with a long history of violence and sabotage.”

          Google Scholar Illiteracy at Skeptical Science


          “In a desperate attempt to diminish the value of the list of peer-reviewed papers supporting skeptic’s arguments, Rob Honeycutt from Skeptical Science not only lies but puts on a surprising display of his Google Scholar Illiteracy. He fails to use quotes when searching for phrases, is unable to count past 1000 and fails to remove erroneous results. It is clear that not only does he not understand how to properly use Google Scholar, he has no idea of the relevance of any of the results he gets.

          Update: Rob was forced to concede I was correct (though never owns up to blatantly lying) and has desperately made a flawed updated “analysis”. His original inaccurate number of 954,000 results went down to 189,553 results (which he fails to mention in his update) of which 160,130 (84%) CANNOT BE VERIFIED due to the 1000 result limit imposed by Google Scholar. The remaining results are irrefutably filled with erroneous nonsense that has to be individually removed before any sort of accurate count can be taken (see the updates for more information). None of which was done leaving his post to be worthless and those who cite it computer illiterate.”

          More on skeptical science,

          The Truth about Skeptical Science


          “Skeptical Science is a climate alarmist website created by a self-employed cartoonist, John Cook. It is moderated by zealots who ruthlessly censor any and all form of dissent from their alarmist position. This way they can pretend to win arguments, when in reality they have all been refuted. The abuse and censorship does not pertain to simply any dissenting commentator there but to highly credentialed and respected climate scientists as well; Dr. Pielke Sr. has unsuccessfully attempted to engage in discussions there only to be childishly taunted and censored while Dr. Michaels has been dishonestly quoted and smeared. The irony of the site’s oxymoronic name “Skeptical Science” is that the site is not skeptical of even the most extreme alarmist positions.

          John Cook is now desperately trying to cover up his background that he was employed as a cartoonist for over a decade with no prior employment history in academia or climate science.

          Thanks to the Wayback Machine we can reveal what his website originally said,

          “I’m not a climatologist or a scientist but a self employed cartoonist” – John Cook, Skeptical Science

          • Are you tired of being embarrassed and having all your lies debunked?

            Rebuttal to “Poptart’s 450 climate change Denier lies”


            “Greenfyre’s rambling blog post of lies is something alarmists find when they desperately Google for anything to discredit the list. They ignorantly believe that because a criticism is posted online it must be true. As demonstrated below, absolutely nothing in his post is factually accurate. Many of these corrections to his nonsense were made in the comment section to his blog post but Greenfyre dishonestly refused to make any corrections. Instead he hopes people will reject the list based on his propaganda.”

            If all you can do is spam long debunked nonsense you turn up using Google, then I suggest you find a different occupation.

          • I find it fascinating that after I debunked all your lies you now are trying to get me banned. Banning me did not work out so well for Skeptical Science,

            Skeptical Science: The Censorship of Poptech


            “In March of 2012, the same computer illiterates at Skeptical Science who do not know how to use Google Scholar had their forums “hacked” and the contents posted online. In these I am mentioned in at least 65 discussions, with 17 forum threads started that specifically mention my name and one forum category devoted entirely to discussing the Popular Technology.net list of papers. These discussions involve almost entirely with how to “deal” with the list. One of the ways they attempted to “deal” with the list was by having a former bike messenger and man-purse maker Rob Honeycutt write a Google Scholar illiterate post. In it Rob failed to use quotes when searching for phrases, is unable to count past 1000 and failed to remove erroneous results such as, “Planet Mutonia and the Young Pop Star Wannabes” – believing it to be a peer-reviewed paper about global warming. After being unable to refute how Google Scholar actually works they resorted to an extensive censorship of my comments and eventually a site wide purge of all of them.”

            “The impact of that ban on PopTech was to silence him.” – Sphaerica (Bob Lacatena) [Skeptical Science]

            “[W]e should have a blanket ban of any mention of Poptech in any SkS blog posts – not give him any oxygen.” – John Cook [Skeptical Science], March 21, 2012

        • Did you not read the rebuttals section of the list? Why would you embarrass yourself by posting long debunked propaganda? Are you claiming to be as computer illiterate as those at skeptical science?

    • My favourite line

      “The worst investment decisions are generally made when dumb money is chasing yield,” GMO says.