Weekend Links August 3-4

By in European Economy

| 59 comments

ScreenHunter_01 Apr. 02 06.19

Global Macro/Markets:

  • Swaps Probe Finds Banks Manipulated Rate at Expense of Retirees – Bloomberg
  • ‘The most dishonest bankers walk away with the most money’ – Guardian

North America:

  • July Employment Report: 162,000 Jobs, 7.4% Unemployment Rate – Calculated Risk , BI
  • Senate Republicans Eye ‘Grand Bargain’ on Budget – WSJ
  • Banks Replacing Enron in Energy Incite Congress as Abuses Abound – Bloomberg
  • Summers After Government Saw Wealth Surge to $17 Million – Bloomberg
  • Low Wages Work Against Jobs Optimism  – WSJ
  • Early 3Q data lifts off – Tim Duy

Europe:

  • Italian Court Upholds Berlusconi Sentence, Setting Stage for Crisis – New York Times
  • Belarus: potash loser – Financial Times
  • Greece should defy the gunboat creditors –  Ambrose
  • Brazil backs IMF aid for Greece and recalls representative – FT , Brazil’s previous stance was a little different Reuters

Asia:

  • Japan’s economic overhaul carries global risks, IMF says – WSJ
  • Indonesia growth falls below 6% as risks to economy increase – Bloomberg

Local:

  • Credit to get cheaper, say economists – AFR
  • There’s a lot more to fret about than the budget deficit – Gittins!
  • Labor’s $17.4bn plan in go-for-broke election – AFR
  • China poses risk to fiscal recovery – AFR
  • Labor delivers bad news on jobs, deficit and growth – TheOz
  • Election is go. SMH

Other

  • Twitter Prediction For July NFP – Business Insider
  • National Geographic: 2013 Travel Photo Contest winners – Telegraph
  • Australian Parliament urges citizens to bypass geo-locks on software –  Ars Technica
  • Russia gives Snowden asylum, Obama-Putin summit in doubt (Reuters)
  • Google unveils latest challenger to iPhone  – FT
  • Brazil’s central bank is under pressure – SoberLook

 

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Comments

  1. The Patrician

    Mackay rental vacancies take off

    http://www.couriermail.com.au/news/queensland/tenants-being-offered-tvs-ipads-and-cash-to-rent-properties-as-mine-job-losses-empty-out-mackay/story-fnihsrf2-1226690459363

    some meat on the bones

    http://www.sqmresearch.com.au/graph_vacancy.php?postcode=mackay&t=1

    “But Tanya Booth, from Insite Realty, described some of the rental offers as “ludicrous” and warned they could send landlords to the wall.
    “These homes are worth more,” she said. “They’re scaring the market and I am worried.”

    Insite Realty….heh

  2. Pfh007MEMBER

    That sober link above is a good one.

    http://soberlook.com/2013/08/brazils-central-bank-under-pressure-as.html

    Always interesting watching what is happening in Brazil. That country is rarely discussed in Australia even though it faces similiar issues to Australia and Canada. Probably not enough portugeuse speakers work in Australia.

    They are struggling as they reach the point where their interest rates no longer are attractive enough to attract foreign investment and their currency has started to plummet. As they try to raise rates to put a floor under the currency, the economy that has been goosed with low rates starts getting the shakes. Oh – and they are freaking out about China slowing – sounds familiar?

    Keep in mind that Brazil actually tried to do something – at the time -about the easy capital flooding, in to limit this problem. Down under our attitude was more like “Woo hoo cheap money lets get as much as we can eat”.

    Thank goodness we are known for paying our debts with whatever it takes, and we invested so much of the foreign capital we borrowed in income producing stuff like ceasar stone kitchens and over capitalised Victorian / Federation era theme parks. /sarc

    Borrowings that don’t produce income could be a problem (for those who borrowed – ie the local banks) except the Oz Govt has signed up the entire nation to go guarantor. Finally, they are thinking about charging a fee for the privilege and listen to the squeals.

    We should require the banks to reduce their wholesale borrowing for local mortgages to zero over the next 2- 4 years.

    Yes it will probably mean banks will need to offer more on term deposits and mortgage rates will drift upwards ( and that will produce squeals amongst the debtors) but we will need our national credit card / limit for useful stuff in the years ahead and getting the trinkets and consumption off it will be a good start.

    • Ronin8317MEMBER

      I don’t think the Brazil central bank is raising to prop up the currency. Brazil’s inflation is running at 8.5%, so their Central Bank need to raise interest rate.

      • Pfh007MEMBER

        Yes, that would be a stronger motivation but it may be a case of hitting 2 birds with 1 stone. A weakening currency is likely to increase any existing internal inflation pressures.

        In any event the message remains the same, if your low interest rates are heavily dependent on the saving habits of foreigners rather than internal habits of saving, you run the risk that the entire structure of your economy will come to reflect that reliance.

        A sudden change in the habits of those foreigners may result in a painful adjustment. Better to get a head of the curve and wean the economy away from that excessive reliance – starting with mortgage finance and govt deficit financing.

        Even with modest ambitions we are talking about an adjustment that will not be easy.

        Unfortunately, in Australia most are calling for ZIRP as though lower rates are a costless exercise in eating the magic pudding.

        Australia is not Brazil but we would be unwise not to watch closely.

        If for no other reason than the Brazilian’s may have a brilliant plan to boost volumes to adjust for falling commodity prices – just like we do.

      • flawse

        Oh and anyone think that inflation is not going to become an issue here?

        This is madness. We decide on the fairy story outcome we want then we make up a whole raft of assumptions to fit the outcome we so earnestly desire!

        This is the way the Govt, Treasury, RBA, Bank economists, MSM and, unfortunately, even MB are looking at the problems.

      • flawse

        You’ve nailed it again pfh. But you’re too late!

        The answers lie back in time. Still it would be better not to just go on making the problem worse!

  4. Mitch

    A Rental Bond backed by a spread of tenants who were once mortgage payers, who now prefer to pay rent to the investors rather than mortgage payments to Banks. Where do I sign up !

    Meanwhile, back at the rental situation, it’s not just Mackay that is suffering, blue ribbon South Yarra is fast getting close to 10% vacancy rates. There are plenty of new listings this month and still more to come.

    http://www.sqmresearch.com.au/graph_vacancy.php?postcode=3141&t=1

    • JacksonMEMBER

      Wow, very interesting. Rooftop solar definitely having an impact in WA too, knocked $100M off Synergy income last year.

      • aj.

        I notice there has been more and more noise from big power lamenting all the terrible costs they have to deal with from all the new household solar.

        Wait for the solar charge or state sponsored sunlight tax – the world is already agog at the Spanish.

  6. Gunnamatta

    Just had a read through the Gittins piece.

    I dont know what has come over the man. Just 3 months ago I swear he was on psychotropics and now I could swear he was an amalgam of a number of commentators here with a dollop of HnH.

    He has pretty much nailed things though

    • Pfh007MEMBER

      He is wearing a neck brace at the moment due to the whiplash from a rapid change of direction.

      It does make you wonder though.

      Does he actually follow the economic debate and in particular engage with ideas he disagrees with? Perhaps a lot of journos now telcommute and the cat is the only sentient being they get to engage with because they ‘don’t do social media’.

      Or at some point do you reach ‘oracle’ status and switch to ‘transmit only’ until one of the few approved sources of oracular information – say a speech from the the Gov – is received on the telex machine (that is kept so clean….).

      “……. Glenn Stevens’ surprisingly sombre speech this week…”

      Key word – surprisingly.

      Anyways it is good to see Ross change channels.

      • flawse

        Gittins might well have been reading MB but he still does not understand even the most basic of economic principles. I guess its a common problem of modern economics so one ought not be too critical.
        Then again maybe he’s just trying to fill in a bit of time so that, perhaps, the mug punters will forget the rubbish he has been sprouting before he goes on to the next, for him, enlightened stage.

      • Nudge

        That is kept so clean…. And it types to a waiting world…. Love your work Pfh!

        http://www.youtube.com/watch?v=LDxFtQgoWt8

        Maybe Phil just forgot to come out & tell everyone Glenn was having a gloomy day & was only jerking. Ross took him for real…..

        I must admit it’s good to see some MSM starting to get a bit closer to reality. I suppose their masters can only deny for so long before they lose their credibility entirely & let the Gini out of the bottle.

    • aj.

      It’s interesting to reflect on how bad the economics and finance media were until the blogs opened up more freeform discussion and critique.

      Not really wanting to single out Gittins here (there is a lot to like about his philosophical stance on consumption generally) – but it’s a reminder of just how bad, really really bad, the mainstream media was servicing the punters.

      Massive private debt, stupid structured products, asset speculation, the rise of usury, home equity theft scams, and governments that have used private debt and asset sales to scam the electorate – all this occurred while our financial media was busy singing from the corporate song sheet.

      • Pfh007MEMBER

        Yes – Gittin’s did a great job during the 1980s and 1990s explaining economics and the reasons for reform etc. I am just a bit disappointed that in recent times he seems unwilling to question some of his own certainties.

        The only way you do that is by seriously engaging in an ongoing manner with the ideas you disagree with the most – and not just dismissing them out of hand.

        One of the things I like about MB is the range of views that get aired. Ultimately, good ideas will persuade – they don’t need to be accepted as a matter of faith or ideology.

  8. AB

    Not sure if anyone takes Jessica Irvine seriously since she joined News LTD, but she’s now pimping for the removal of stamp duty…apparently without anything to take its place.

    Sure it would cost $12 billion per year and house prices would just rise the same amount, but the increase in turnover would be worth $500 million in happiness (seriously!)

    http://www.news.com.au/money/cost-of-living/stamp-duty-hobbling-housing-mobility-economists-say/story-fnagkbpv-1226690692870

    • Pfh007MEMBER

      An odd omission that caught my curiosity. I think the simple explanation is the paper did not discuss alternatives and she just limited herself to reporting the paper.

      http://ftp.iza.org/dp7463.pdf

      http://www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=7463

      Having said that the last line of the paper was as follows.

      “…..While recurrent land or property taxes are potentially a more efficient way of raising revenue, land transfer taxes may be an appropriate second-best policy where recurrent land taxes are infeasible…”

      Infeasible?

      Why not just – ‘……challenging for lazy pollies to communicate the advantages.”.

      Considering the paper was published in June 2013, it is possible that they considered demolishing stamp duties was the best first step and discussing land tax would just be a distraction.

      Once that bridgehead has been acheived then start work on explaining the benefits of the most sensible replacement – land tax.

  9. Mitch

    On the subject of land tax there is a referendum at the same time as the election seeking constitutional change. They are seeking more centralised control over Local Councils whereby the Federal Government can bypass State Government and fund councils directly.
    This would provide a great platform for pork barreling as well as possibly implementing land taxes.
    Which reminds me I have just studied my local council’s budget, no sign of austerity within the budget, locked in wage increases for 3 years of 5% per annum, total staff 650, total salaries $60m, average about $90k. CEO $350k + bonus. Rates up 6% this year after another 6% last year. Good to see though the CEO telling rate payers that they were successful in reducing the waste collection contract down by 4%.
    So the real workers get screwed and the administrators get a 5% pay rise.

  10. Mav

    http://www.smh.com.au/federal-politics/federal-election-2013/murdochs-vicious-attacks-on-rudd-its-business-20130803-2r65x.html

    Why Murdoch wants Rudd to lose the coming federal election is not merely political, it is commercial. News Corp hates the government’s National Broadband Network (NBN). The company has formed a view that it poses a threat to the business model of by far its most important asset in Australia, the Foxtel cable TV monopoly it jointly owns with Telstra.

    Paul Sheehan is a Right wing commentator. . So it will be interesting to see what excuse professional wingnuts like 3d1k and GSM will come up with.

    • The Patrician

      Thanks Mav

      The question is not whether monopoly-motivated Murdoch and his low-rent bully boys will continue to go after Rudd’s disruptive NBN but rather, what competitive sacrifices Rudd will make to gain the favour of the Sun King.

    • General Disarray

      Nothing new. Rupert spoke to Tony Abbott the day before Abbott famously told Turnbull to destroy the NBN.

      Everyone knew where Tony got those orders but it’s nice to know who really runs the coalition.

    • spleenblatt

      Everything is commercial for Rupert Murdoch, but the curmudgeonly old c**t and his swarm of screeching howler monkeys don’t always get their way (see: Romney v Obama).

    • Gunnamatta

      I think Kevin is an utter psychopath who could not give a rats toss about the vast bulk of working class/social democratic/progressive Australians he would purport to represent…..

      But I would almost consider voting for the ALParatchiks if one of their policies addressed Uncle Ruperts share of Australia’s media.

      …….if I could believe them that is

      • spleenblatt

        Psychopath is perhaps a bit strong, but there is some odd pathology at work in Rudd – not unusual for a true self-believer. But is he clever enough to find the cure to cancer ? Let’s hope.

      • Gunnamatta

        3d1k

        That ranks right up there with ‘meteorological flights’ being the reason US or Soviet aircraft occasionally slipped into someone elses airspace….

      • spleenblatt

        For someone who posts links to Larry Pickering’s scuttlebutt, you seem conveniently credulous. Evidence on pages one onwards in every Murdoch publication for the next five weeks.

      • 3d1k

        Lol. One link. Once. Actually could have been Michael Smith News, cant recall. Anyway Albo escaped to live another life like 9 lives of a cat,in this case a slinky Siamese…

    • 3d1k

      ‘I like to deal with rightists – they say what they really think – not like leftists, who say one thing and mean another’

      Mao

    • desmodromicMEMBER

      Is it hypocrisy or recognition that there are powerful non-democratic influences shaping our economic and political future? Many people cast a vote based on a single issue, eg. tax cuts, but that doesn’t make them hypocrites.

      We get a psychopath whichever way we vote.