Weekend links 6&7 April 2013

ScreenHunter_01 Apr. 02 06.19

Global Macro/Markets:

North America:

  • Yellen: Fed should focus on jobs, even if inflation edges past target – Reuters
  • As Hedge Funds Thrive on Mortgages, the House Party Is Far from Over – Institutional Investor
  • Only a Tiny Percentage of Americans Opposed to Breaking Up Big Banks – The Big Picture
  • Fed Weighs a Reaction to Stirrings of Recovery – New York Times
  • Obama ‘offering to cut US pensions’ for deficit deal – BBC News
  • Canadian employment tanks – Twitter Pic
  • Signs of a Canadian housing downturn are everywhere – Financial Post
  • US economy adds 88,000 jobs in March – The AFR
  • Gas price hints shale revolution fading – Financial Times


  • What’s that shocking smell wafting around Europe? A financial system with the runs – The Global Mail
  • Greece passes new law to spur investment, boost tourism – Reuters
  • The euro crisis: Has anyone seen the ECB? – The Economist
  • No Triple-Dip: UK Economy Fears Ease – CNBC
  • Italy is now the largest borrower from the Eurosystem – Credit Writedowns
  • Cyprus, where the vicious circle stopped – FT Alphaville
  • A warning for UK first home buyers – The Telegraph


  • Japan’s ignoring modern Bernanke and following classic 1999 Bernanke – Macro Market Musings
  • China as a case study for future Australian eco-cities – The Conversation
  • U.S.Trade War With China? – The Diplomat
  • Abe surprised me! – Noahpinion
  • George Soros: Japanese Policy Dangerous, Yen Could Collapse – valuewalk.com
  • Abenomics Takes Off: Can Japan Un-Doom Itself? – Matthew O’Brien – The Atlantic
  • Soros to CNBC: China’s Property Bubble ‘Won’t End in a Crash’ – CNBC
  • China’s internet: A giant cage – The Economist
  • A Breakdown of China’s Trillion-Dollar Budget – tealeafnation.com
  • What China Learned from the Soviet Union’s Fall – The Diplomat
  • Africa and China are good for each other – Financial Times


  • Chris Joye reinvents housing “bet” with Jeremy Grantham by including “total returns” (prices plus rents) – The AFR. Here’s the original bet. Question: why not include real values?
  • Bullion Baron clinically dissects Chris Joye’s “bet” with Grantham – Bullion Baron
  • Interesting RP Data research blog on population growth – RP Data
  • Mirvac finance director quits – Business Spectator
  • What a “sustainable” super system would look like – The Conversation
  • What is a tax expenditure? – Matt Cowgill
  • A reshuffling for Fairfax, but are they more consolidated? – The Conversation
  • Coalition considers widening petroleum tax – Business Spectator
  • BoQ head thinks Brisbane homes overvalued – Courier Mail
  • Labor’s super changes a lost opportunity – Jess Irvine
  • Super changes to hurt Canberra public servants – Canberra Times. Cry me a river…
  • 457 wages higher than average – The Australian
  • Sydney residents opting for high rise living – The AFR
  • No budget surplus in forseeable future – The AFR
  • Abbott in a nasty budget predicament – The AFR



  1. Wont be everyones cup of tea and doesnt look at Australia but this guy, Erik Kraus, became a legend in Russia buying Russian corporate debt when nobody else would touch the stuff.

    You could pop his views under the sub heading – critical of capitalism as espoused by mainstream english language media.

    Comes out with a newsletter every few months or so which goes over what he sees of the trading world, makes some big calls. Always a thought provoking and entertaining read.


    • Once again, Thx for a good read.
      “Anyone investing on the basis of what they read
      in the Financial Times/Economist/WSJ has only himself to blame. When you pick up your morning paper, try to remind yourself that what you are getting is largely manipulation/PR spin, and try to ask
      yourself not “is what they are telling me true?” but rather “Why are they telling me this?”

      “Once again – and it is simply amazing how
      many of our peers miss this one – JM Keynes’ prescriptions were not, repeat not, continuous fiscal/monetary stimulus ad vitum æternam…..”

    • There is a bit I don’t agree with, but he does make some very good points and valid observations.

      He seems a little upset at the attention Cypress got for laundering (ok, we’ll argue the technicalities there) Russian money (page 10). …I would say that if we are going to substitute “Jewish” with “Russian”, and the Jews (in some kind of a faith-based tax rort) have been manipulating the system, then they too should face the consequences.

  2. “Largest Dutch bank defaults on physical gold deliveries to customers.

    Last week, a rubicon was crossed in the precious metals market as one of the largest banks in Europe defaulted on their gold contracts, and informed their customers there was no physical gold available for delivery.

    ABN AMRO, the largest Dutch bank in the Eurozone, issued a letter to their gold contract customers of failure of delivery, and instead will pay account holders in a paper currency equivalent to the current spot value of the metal.”


    • Not surprised AB considering total trading volume of “paper” gold for 2011 was estimated at 50,459,865,000 ounces. (Gold Fields Mineral Services, 2012. As a point of reference, the World Gold Council states that annual mine production for the last 5 years has averaged approximately 83,000,000 ounces, and total above ground stock of physical in all forms is approximately 5,465,500,000 ounces. (World Gold Council, 2012) One might conclude that a significant amount of leverage exists in the gold markets given the fact that in 2011, the volume of paper gold that traded equaled 10x the amount of physical gold that has been mined in history. (Dan Flynn and Joe Yasinski of Gold Bullion International)

      • The Patrician

        Nuts. We scream about paying $5 bucks a week for carbon pricing while silently consenting to getting screwed tens of thousands of dollars each on car pricing to prop up a grossly inefficient industry. Just nuts.

        • It seems that every time this debate about subsidies gets wheeled out, the calls (from the industry and govt.) is that “every other country with a car industry does it”.

          In that case, good. Let their budgets fund the gap. It doesn’t mean we have to do the same.

          Can’t help thinking that the couple of hundred million p.a. we hand out to the auto companies (Holden gets about $150m p.a., I think) could be better spent elsewhere. Say, building infrastructure, manufacturing or service industries. This would surely soak up more labour & improve return on this (our, the taxpayer’s) investment

      • Somewhat curious since Texas has one of the highest poverty rates in the US.

        You should stop treating Texas as some kind of golden calf Leith, it doesn’t fit the bill for what I would call a shining example of a model society. About the best thing about it seems to be it’s strict prudential regualtions when it comes to mortgage lending.

        • “About the best thing about it seems to be it’s strict prudential regualtions when it comes to mortgage lending.”

          If Texas had “strict prudential regulations” on mortgage lending, would 3.5% deposit home loans be allowed? The only limits Texas has on housing-related lending are modest 80% LVR restrictions on home equity lines of credit (i.e. mortgage redraws). These make minimal difference to the housing market or overall house prices.

          As for your claim about poverty, what do you expect when a state experiences massive inward migration from working class and poorer households, who have chosen Texas because of its affordable living? What is amazing is that Texas has experienced such strong job creation and yet still maintained low unemployment in the face of such strong domestic migration.

          I suppose you would prefer the growth containment model whereby job creation and job opportunities are lower and the poor and working class are forced to move out due to spiralling living costs? But hey, at least they keep out the riff raff.

  3. Chris Joye reinvents housing “bet” with Jeremy Grantham by including “total returns” (prices plus rents) – The AFR.

    Oh dear.. if Jeremy Grantham hears about this (I doubt it), I anticipate his reaction will be

    “Chris who?”

    Give it up CJ. You are better at writing about CLF and RBA.

  4. JacksonMEMBER

    Nice piece of the Conversation about super, particularly The pension and superannuation systems need to be thought of as a single system. . This concept is way too simple for our politicians… Over complicate everything until everyone switches off, then start the rorts.

    • an absolutely crackerjack discussion about central banking and some big ideas being chewed over. If they make a video of it (it is live at the moment) try and get hold of it….

      • Agree completely.

        So much modern economic talk ignores the geopolitical reality that underlies all economic assumptions. In times like this, when there is a clear changing of the guard, phenomenal wealth will be simultaneously created and destroyed. Yet where does this fit into today’s models?

        IMHO the whole economic basis for “safe” industries / investments is invisibly undermined when a the a nation surrenders its traditional ranking in the industrial world. However, most twentieth century economists will happily tell us that an advancing economy must slowly transition into a service based model, especially as its wealth increases. Just think about how badly allocated our nations investments are, if this service transition assumption is fundamentally wrong.

        At conferences like this one, people are free to explore these economic what-ifs and hopefully create a new basis for sustainable war-free growth.

        • Missed it 🙁

          My continually rant on our over-dependence on service industries abd have done, apparently ineffectually, for 45 years! I guess in theat time I have been a bit busy from time to time with my own family and business.
          However….the destruction of every productive industry we have, and their associated communities. in favour of ‘service’ (what a bloody misnomer!) industries is plainly obvious and is reflected in a chronic out of control CAD that has necessitated the sale of every asset that we have not already ourselves destroyed.
          What I don’t understand is how it is not patently obvious to everyone who thinks they think seriously about economies.

        • Thats the one, the top video there is one you could – and I am – sit and have a beer and think over while its unfolding.

          • no faffing about with polite suggestions to use macro prudential tools from Adam Posen

            ‘The financial system needs to be regulated back to the stone age – circa 1973’

  5. The Patrician

    Crony Capitalism and the IPA policy ties that bind Tony, Rupert and Gina.

    Last Thursday night two Australians and one American billionaire met in in Melbourne to shore up an alliance that will shape Australian economic policy for at least the next 5-10yrs.

    What is IPA? What is its policy agenda? What’s in it for Rupert and Gina? What policies will the incoming Abbott government implement?

    Three of IPA’s leading lights outline the vision in the linked IPA article.


    It is worth taking the time to read all 75. Some actually have merit. See if you can pick the ones that Rupert and Gina paid for.

    Tony has already publically committed to 10 of the 75

    1. Repeal carbon pricing and the ETS.

    2. Abolish the Department of Climate Change

    3. Abolish the Clean Energy Fund

    4. Repeal Section 18C of the Racial Discrimination Act

    6. Repeal the renewable energy target

    42. Introduce a special economic zone in the north of Australia including:

    a) Lower personal income tax for residents

    b) Significantly expanded 457 Visa programs for workers

    c) Encourage the construction of dams

    43. Repeal the mining tax

    44 Devolve environmental approvals for major projects to the states

    49. Privatise Medibank

    69. Immediately halt construction of the National Broadband Network and privatise any sections that have already been built

    How about a competent journo sit Tony down before September and establish his position on the remaining 65?

  6. I don’t know how I missed this corker, but Christopher Joye in his Friday piece:

    “One thing we know about house prices is that past performance is a guide to future returns.”

    It’s different here.