Weekend Links 16-17 March 2013

Global Macro/Markets:

  • The stock market and economy are two very different animals – Abnormal Returns
  • A new era for gold? – Financial Times
  • BRICs Abandoned by Locals as Fund Outflows Reach 1996 High – Bloomberg
  • No ‘Irrational Exuberance’ in Stocks Now: Greenspan – CNBC

North America:

  • 2013 Economic Report of the President – whitehouse.gov
  • Ten Economic Trends Through The Eyes of White House Economists – Wall Street Journal
  • Consumer prices post largest increase in nearly four years – Reuters
  • Fed: Industrial Production increased 0.7% in February – Calculated Risk
  • Preliminary March Consumer Sentiment declines to 71.8 – Calculated Risk
  • Consumer sentiment hit by fiscal policy concerns in March – Reuters
  • And the King of the Fiscal Squeeze Is…Bill Clinton? – cato.org
  • Want to debate Medicare costs? You need to see this chart first. – Washington Post
  • Manufacturing Picks Up Heading Into U.S. Budget Cuts – Bloomberg
  • Bankistan Vanquishes America – Barry Riholtz

Europe:

  • Delusions at the European Commission – New York Times
  • Could Hungary Be Thrown Out of the EU? – CNBC
  • King speaks out to halt sterling’s fall – Financial Times
  • ECB: Euro area economic situation and the foundations for growth (slides from the presentation) – ECB
  • EU Said to Plan Concession on Tax Credits as Bank Capital – Bloomberg

Asia:

Local:

  • Vic Government takes $200 million hit – The Age
  • Why nominal GDP is so flat – The Age
  • Budget sinks – no sign of revival – The Australian
  • RBA more likely to move up than down – The AFR
  • Lies, damn lies, and Australian politice – The AFR
  • Rio’s $12 billion offset to hit MRRT take – The AFR
  • States wrangle on GST take – The AFR

Other:

Comments

  1. “…telling prospective sellers that they should seize the current opportunities before the tax on property transactions jumps from rates as low as 1% to a fixed rate of 20%.”
    That’s how to get property prices down and get State revues up with stamp duty receipts flooding in! Forget this fiddling about with interest rate stuff…

  2. “Why nominal GDP is so flat”

    That is actually a very interesting article from Gittins in the The Age. Extrapolating from what he says about GDP reveals one of the limitations of relying on spending as a proportion of GDP as a measure of the government share of the economy – in his words, “domestic spending includes the prices of imports but excludes the prices of exports, whereas GDP and its deflator exclude the prices of imports but include the prices of exports.”

    Essentially that means that comparing government spending with GDP is comparing spending with output. Maybe better to compare government spending with total domestic spending?

  3. Gittins: “why wasn’t Treasury expecting the terms of trade to deteriorate and allowing for this in it’s projections of tax revenue? It was, and is has been – for most of the past decade, in fact”.

    Gittins is making excuses for Treasury. All their projections have suggested that the ToT would remain off the charts for as long as anybody could foresee.

      • I’m pretty sure he is saying that Treasury has been factoring a deterioration of the ToT into their projections.

  4. Why you should never listen to Stephen Conroy (even/especially if you’re PM).

    http://www.theage.com.au/opinion/politics/conroy-runs-distraction-for-pm-20130315-2g5w0.html

    “Ultimately, the Prime Minister rejected Conroy’s advice, compromised on her support for Israel in the UN, and lived to fight another day. If she had accepted his advice, she would have had her policy overturned in the Labor caucus, been humiliated, and quite likely lost her leadership as a result.

    This week, Gillard accepted Conroy’s advice on another matter – media regulation. It was a big mistake.”

    • Wow 170,00 new homes over 20 years, with an estimated population increase of 1.3 million.

      Talk about a band-aid for a bullet wound.

      It saddens me that we will have to pay for the ignorance and short sightedness of our politicians as our cities populations continue to grow, insuffecient infrastructure is built for new areas and current infrastructure falls apart under the strain of the current population.

      Much like with the economy its a case of kick the can down the road to be dealt with in another decade or so.

      With the budget in the red to the tune of $27 billion already this financial year one has to ask how much longer can this boom cycle go on for? For how long can property prices continue to rise out of the reach of young Australians?

      I would love to hear people’s thoughts on when the music will finally stop.

      As the boom shifts into high gear I personally can’t help get the feeling we are approaching the cliff ever faster.
      When the slow melt was on I was hopeful we might avoid it all together as inflation, wage growth and a high savings rate slowly ate away at the risks facing our nation. But now I can’t see it ending in anything but tears.

  5. Matt Barrie on the startup & Venture Capital environment in Australia: “Our venture capital industry is on par per capita with countries that herd goats as a core industry”

    “Australia puts more money per capita on the Melbourne Cup horse race ($7.27 per capita) than into Venture Capital ($4.09). At least we are risk takers. Our venture capital industry is on par per capita with countries that herd goats as a core industry.”

    http://www.linkedin.com/today/post/article/20130314130000-921366-startup-australia

  6. Gotta spend that Wall St bonus somehow (via Naked Capitalism);

    The Password Is ‘Braveheart’ — Here’s The Invitation To The Secret Floating Strip Club That Was Made Just For Wall Streeters

    Read more: http://www.businessinsider.com/invitation-to-the-saint-venus-theater-2013-3#ixzz2NgsZ8ao8

    Get in quick Jamie, you might be the next stripper for Bubba the Transvestite Serial killer;

    http://www.marketwatch.com/story/senate-jp-morgans-dimon-withheld-loss-data-2013-03-14?link=MW_latest_news

  7. “Panics do not destrot capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works”
    John Stuart Mill, Economist 1806 to 1873

    I would call our property bubble, a hopeless unproductive works….

  8. We do not have a population pryamid, we have a vase and when sellers exceed buyers, values fall.

  9. Reflections of a banker via the Telegraph
    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9934819/Adair-Turner-Bankers-no-longer-in-denial.html

    “If you go back to March 2009, which is the point where all of us had gone through the crisis and were coming up for air and saying ‘how do we put things right for the future?’ – if you look at all the forecasts, Bank of England, Treasury, the IFS [the Institute for Fiscal Studies], IMF, World Bank, they all suggested a much faster and more robust recovery of the developed-world economies than has actually occurred,” says Lord Turner.

    “I think that’s because we were slow to realise that once an economy has become overleveraged, once either corporates or households are over-leveraged, they will devote whatever disposable income they have to trying to get their balance sheets down, and therefore the demand for credit is depressed.”

    And until the economy recovers, the financial crisis will cast its shadow over everything that happens.

    It was a remarkable time – and it leads to a remarkable admission from someone once closely involved in the running of banks. Lord Turner was formerly vice-chairman of Merrill Lynch Europe and a non-executive director of Standard Chartered.

    “I think we – as the authorities, central banks, regulators, those involved today – are the inheritors of a 50-year-long, large intellectual and policy mistake,” he says.

    “We allowed the banking system to run with much too high levels of leverage, inadequate levels of capital, and we ignored the development of leverage in the financial system and in the real economy.

    “And not only did we ignore it but we had a pretty overt intellectual philosophy that we could ignore it, because we knew the financial system was just a market like any other and whatever it did was bound to be for the good because that’s what markets are.

    “That was a huge mistake.

    Another quote:
    “I had never gone back to basics and said, ‘why do we allow banks to run with 30, 40, 50 times leverage?’. And neither had anybody else, funnily.”

    Why not? critics may scream – or, more precisely, there were some people warning of calamity, why weren’t they listened to?

    “Well, it’s partly the frog in the boiling water, isn’t it?” Lord Turner says. “It slowly happens over time. It doesn’t happen immediately so the frog doesn’t leap out. The frog dies.” And while the frog is slowly dying, everyone is living it up on the debt-fuelled proceeds”

    • This sounds a lot like a guy who is lamenting there were not enough seats available when the music stopped and/or lamenting that the music stopped on his watch. The fact that his greedy rapacious “industry” and it’s regulatory functions were quite happy to turn a blind eye and party it up forever if they could (at the expense of everyone else)isn’t nearly adequately explained.

      ““Well, it’s partly the frog in the boiling water, isn’t it?” Lord Turner says. “It slowly happens over time. It doesn’t happen immediately so the frog doesn’t leap out.” Sounds like sadness over the temperature being to high, not that the frog was being cooked in the forst place.

  10. What are the chances of it happening here? (It’s not necessarily a rhetorical question-even though it should be).

    Deposits confiscated. What next? Gold? Again rhetorizzle da PMizzle…..

    • “Deposits confiscated. What next?”

      Confiscation comes in many forms. Confiscation of your rights to free speech and imposing forms of censoreship are usually the first to occur when your Liberty is under attack.

      • +1

        I think direct capital injection to insolvent banks that is funded by newly printed fiat currency is the most likely “solution”.

        Everyone will lose by being robbed by the hidden tax of inflation.

    • Australian Government has shown it will socialize losses (and use common funds to prop up our banks/housing market) just like almost everywhere else. I doubt they would be so brazen to skim bank accounts, but who knows what the future will bring.

  11. From Bloomberg, 17/03/2013 2:40:23 PM
    Australia faces a “massive hit” to government revenue, pushing the nation further into deficit ahead of an election in September, Treasurer Wayne Swan said.

    To read the entire article, go to http://bloom.bg/WrvO1h

  12. “New data reveal scale of China abortions”

    “High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email [email protected] to buy additional rights. http://www.ft.com/cms/s/2/6724580a-8d64-11e2-82d2-00144feabdc0.html#ixzz2Nr1TGc79

    Since 1971, doctors have performed 336m abortions and 196m sterilisations, the data reveal. They have also inserted 403m intrauterine devices, a normal birth control procedure in the west but one that local officials often force on women in China.”

    And that doesn’t include infanticide and abandoned children (the latter being rampant in China, from people running orphanages in China, that I personally know…)

    Jaw-droppingly horrific.

    I knew we were all brutal bastards when we gave ourselves the chance (which we look for, IMHO), but crap…Shall we pull out the Western stat, too, now?

    * shivers *