Links 11 March 2013

Global Macro/Markets:

  • Yes the Financial System Is Rigged, but why not profit from it? – Business Week
  • Jim Rogers: We’re Wiping Out The Savings Class Globally, To Terrible Consequence – Peak Prosperity
  • Another step towards an East-West trade war – The Telegraph
  • The IMF on the Austerity Trap – New York Times
  • Investing: Growth and the markets – The Economist
  • How Much Of The Stock Market’s Growth Is Caused By Its Shrinking? – Dealbreaker

North America:

  • Confidence and Its Effects on the Economy – New York Times
  • Does the U.S. risk a fiscal tipping point? – Econbrowser
  • Forget the Good Jobs Report, Long-Term Unemployment Is Still Terrifying – The Atlantic
  • And yet the labor force participation rate is still falling – Marginal Revolution
  • The stagnation behind the excellent jobs report – Reuters
  • Fed’s Duke Open to Changing Pace of MBS Purchases – Wall Street Journal
  • U.S. recession began around the middle of last year – Econbrowser
  • Fatal Fiscal Attractions – New York Times

Europe:

  • Greece may still have to quit euro: Merkel ally – Reuters
  • European imbalances – VOX
  • A “Politically Explosive” Secret: Italians Are Over Twice As Wealthy As Germans – testosteronepit.com
  • Britain: a nation in decay – The Guardian

Asia:

  • China to Raise Down Payment, Loan Interests on Second Home Purchases – Caixin
  • Outgoing Chinese Premier Wen Jiabao: “China is still under considerable inflationary pressure this year” – AFP
  • “Underlying inflation pressures are clearly building up” in China – Bloomberg
  • “The Chinese government is caught in the dilemma of dealing with slower growth and higher inflation yet again” – Wall Street Journal
  • China Fund Warns Japan on Yen – Wall Street Journal
  • Calls grow to dethrone China’s too-big-to-compete banks – euromoney.com
  • No US-style crash for Chinese housing market, predicts JP Morgan – Global Post
  • China investors should bet on urbanisation – FT Beyond BRICS
  • China’s Economic Data Show Weakest Start Since 2009 – Bloomberg
  • 900 dead pigs in China found floating in Shanghai river – Huffington Post
  • China scraps railways ministry in streamlining drive – BBC News

Local:

  • First job option shouldn’t be 457 visas – The Australian
  • NSW construction industry hiring bikies to collect debts from building companies gone bust – The SMH
  • WA election: Barnett and the Liberals do it easy – The Conversation
  • Swanny is no Paul Keating – The Australian

Other:

Comments

  1. Scrap the EU-ETS: a growing global movement of more than 100 civil society organisations calls on EU member states to abolish “major obstacle” to emissions reduction –

    http://www.carbontradewatch.org/articles/it-is-time-the-eu-scraps-its-carbon-emissions-trading-system.html

    The EU needs to start discussing how to put Europe on a low-carbon pathway, instead of how to save a failed market, explain the campaigners. Markets are a means to an end, not the ultimate goal of climate change policies. If carbon markets fail to address climate change -and the ETS has a track record of failure- they need to be replaced with other means, they argue.

    “For seven years we have heard that trading carbon is the ‘only option’. Yet, on closer inspection, the ETS has itself turned out to be a major obstacle to transformative action on climate change in the EU and an instrument to deepen the ecological debt with countries in the South”, says Lyda Fernanda from the Netherlands-based Transnational Institute

    http://scrap-the-euets.makenoise.org/

    • I read the great discussion from the thread from the other day with interest because really i’m right on your side of the debate on this one.

      My view is that notwithstanding any economic merit, people have lost faith that these types of tools will be regulated effectively in a way that doesn’t discriminate against average citizens in favour of large corporates and financial houses. That is, the big end of town now has such a strong track record for successfully gaming these type of regulatory structures that they are essentially socially useless.

      So the discussion has moved on from the economic theory – even if the economics was good, the regulatory environment is so shockingly flawed and the power of the large actors so vast that the outcome will not be of benefit to anyone other than those that have the capacity to game and rort the system.

    • Just confirms the gut feeling you get about them, viz. that many of them are unethical. Drug dealing, murder, what’s next?

  2. “Consumer prices climbed a more-than-estimated 3.2 percent in February from a year earlier. Standard Chartered Plc estimates inflation will average 4 percent this year, compared with the government’s target of 3.5 percent.”

    Yeah but that’s got nothing to do with us!!!!

    • I care…

      This sort of thing is almost a weekly occurence now – we are even shutting down, cutting back our industries, or we are selling them off. Goodness.

      Isn’t life supposed to be great as a serf? (sarcasm)

      • Yeah Burb…you me Pfh Philbest Op8 and a couple of others. You can’t count us on one hand but two would suffice.

        • Count me on one of the hands, Rosella closed last week as well.
          Peonage on its way, and or the great TOT crisis when all our chickens will come home to roost, except we wont own them. Who is TPG – chinese or swiss? I thought they were a phone company

          • Courtesy of Wikipedia

            TPG Capital (formerly Texas Pacific Group) is one of the largest private equity investment firms globally, focused on leveraged buyout, growth capital and leveraged recapitalization investments in distressed companies and turnaround situations. TPG also manages investment funds specializing in growth capital, venture capital, public equity, and debt investments. The firm invests in a broad range of industries including consumer/retail, media and telecommunications, industrials, technology, travel/leisure and health care.

            The firm was founded in 1992 by David Bonderman, James Coulter and William S. Price III. Since inception, the firm has raised more than $50 billion of investor commitments across more than 18 private equity funds.[1]

            TPG is headquartered in Fort Worth, Texas and San Francisco, California.[2] The company has additional offices in Europe, Asia, Australia and North America.
            http://en.wikipedia.org./wiki/TPG_Capital

            After 94 years in the hands of the Ingham family, the chicken empire has been bought by the global equity firm whose other investments in Australia include energy group Alinta and Healthscope.

            Read more: http://www.smh.com.au/business/tpg-buys-inghams-with-880m-bid-20130310-2fu1a.html#ixzz2NCG5Ob7f

          • Byron Bay Cookie Co has also has he receivers hovering and a friend who works in the printing industry has just picked up more work cause a “big printer” has gone bust. But it’s all in our heads; we’ve never had it so good..apparently.

        • My sense is that there are many more who see the same things Flawse. But for many reasons, they choose not to verbalise it. Like my mate’s 3yo this weekend playing hide ‘n seek … seized with panic in the middle of the yard on not being able to think of anywhere new to hide, she froze, covered her eyes with both hands, and convinced herself that if she couldn’t see others then they couldn’t see her. Delightfully cute, but an apropos analogy for how many adults are choosing to act.

        • Heh…

          Leverage them up with foreign money, buy their assets from under them, give them a job and let them buy some trinkets, and keep ’em happy – then ‘rentier’ yourself all the way to the bank.

          Sounds like the Aussie dream, eh? Shame it also sounds like serfdom, peonage, etc…

          Oh, wait:

          “The guvmit should do something about it!”

          Oh yeah….not.

  3. Krugman
    “Suppose that a government imposes fiscal austerity in a realistic fashion, with spending cuts getting steadily deeper relative to baseline over a period of several years. If the negative impact of these cuts is fairly large — which all the evidence coming in suggests is the case under current liquidity-trap conditions — and if the country starts from a fairly high level of debt — as the austerity countries do — something alarming is likely to happen. Instead of falling, the ratio of debt to GDP is likely to rise for years.”

    It’s taken 50 years of negative RAT rates and economic distortion to get us into this fix. Why the hell does anyone expect it can be fixed in one or two years.

    Note even with Krugman’s model ‘austerity’ reduces debt to GDP ratio after 5 years while the ‘continue on as usual’ results in no improvement.

    In addition he takes a country that has managed to get itself into 100% Debt to GDP and assume it suddenly reveres course without any changes and debt no longer increases. 2% inflation and 2% growth under what interest rates? How do you suddenly stop debt from growing?
    The maths are baloney because the assumptions are baloney.

    • Krugman is an academic ideologue suffering from a permanent overdose of hubris. As Steve Keen has famously shown, he does not understand how “money” and banking work in the real world; indeed, he doesn’t even believe they are “relevant” to the topic of debt. ‘Nuff said. Casually dismiss everything he has to say with confidence.

      • This bloke has a better handle on the problem than most

        Britain: a nation in decay – The Guardian

        The UK’s problems go far deeper than the cuts agenda. It simply can’t produce enough to revive its ailing economy.
        You can’t print your way out. We have to produce STUFF.

          • From the Guardian story…

            ‘Despite the huge incentive to export created by a devalued pound, Britain is still running trade deficits because it has lost the productive capacity to respond.’

            Which is precisely where Australia will be post mining boom. In fact, we’ll be worse off, because a decade of “making room for mining” and a currency on steroids has obliterated our productive capacity.

          • This is why the Keynesian dream of consumption-led recovery cannot possibly work in many Western nations, even if it might theoretically work. Consumer discretionary spending is almost entirely spent on imports.

            Higher taxes on spending, reduced taxation of investment income and incentives for export industry are the only way forward.

            Even Krugman has conceded that one of the reasons Europe has such chronically high unemployment is open-ended unemployment payments.

          • Yep Op8 we have to have that interest rate discussion one day 🙂 (when I’m feeling bright eyed and bushy tailed!)

          • We’re hamstringing our productive industries in every possible way. It’s not ONLY the dollar although we all agree that’s one hell of a big part.

            (I’m feeling like the kid in the Simpson’s who, in response to his mother talking to him, pulled a bucket over his head and banged it with a stick……anything will do to take the pressure off the madness in my own head!)

          • Consumer discretionary spending is almost entirely spent on imports.

            Alex…you don’t happen to have any references on that do you? I’ve been trying to get some sort of number on ‘propensity to import’ for a while. It’s got to be well over 50%.

          • I don’t have any figures, but you just have to look at what constitutes discretionary spending. Electrical goods. Cars. Clothing and footwear. Anything that is discretionary and manufactured comes from abroad.

            The only items of discretionary spending not from abroad are food, alcohol and coffee, and most of the coffee is imported, just that the cost of the coffee in your cup is a small proportion of the price.