Happy New Year!

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Dear readers, all of us here at MacroBusiness wish you a prosperous and exciting 2015!

We would like to thank you again for a successful 2014. As is customary at this time of year, MB’s two main bloggers – David Llewellyn-Smith and Leith van Onselen – will be taking a much needed break, and MB will operate on a reduced timetable.

The timetable for the coming month is as follows:

  • Chris Becker will resume normal operations on Monday 5 January and run MB until Friday 16 January.
  • David Llewellyn-Smith will take over from Monday 19 January.
  • Leith van Onselen will resume from Monday 26 January.


The MacroBusiness Team.


    • “I exercise like a Trojan horse and my body’s falling apart!”

      Yeah, too much is a killer! I’m certainly feeling it too.

      • migtronixMEMBER

        What’s going on Esco? Was your resolution to be more like me, but you can’t follow through?

        • Mig

          Nah, Made (what I thought was) a comical comment about training like a hollow wooden horse on wheels….

          But it didn’t register under jimbos comment. Ha! Just like this.

          Tried twice.

          Too much to drink I think.

          I’ll leave the comedy to the experts.

          Ps. Keep up the good work on Dr Smithy. Couldn’t believe he had the nerve to pick you up on context and nuance, something I think is his greatest failure.

          • Ps. Keep up the good work on Dr Smithy. Couldn’t believe he had the nerve to pick you up on context and nuance, something I think is his greatest failure.

            Thanks, I needed a laugh after spending the afternoon fixing relatives computers.

  1. Looking Back : Seven shocking events of 2014

    From Prof Ugo Bardi.

    1. The collapse of oil prices. Price oscillations were expected to occur near the oil production peak, but I expected a repetition of the events of 2008, when the price crash was preceded by a financial crash. But in 2014 the price collapse came out of the blue, all by itself. Likely, a major financial crisis is in the making, but that we will see next year.

    2. The ungreening of Europe. My trip to Brussels for a hearing of the European parliament was a shocking experience for me. The Europe I knew was peaceful and dedicated to sustainability and harmonic development. What I found was that the European Parliament had become a den of warmongers hell bent on fighting Russia and on drilling for oil and gas in Europe. Not my Europe any more. Whose Europe is this?

    3. The year propaganda came of age. I take this expression from Ilargi on “The Automatic Earth”. Propaganda is actually much older than 2014, but surely in this year it became much more shrill and invasive than it had usually been. It is shocking to see how fast and how easily propaganda plunged us into a new cold war against Russia. Also shocking it was to see how propaganda could convince so many people (including European MPs) that drilling more and “fracking” was the solution for all our problems.

    4. The Ukraine disaster. It was a shock to see how easily it was for a European country to plunge from relative normalcy into a civil war of militias fighting each other and where citizens were routinely shelled and forced to take refuge in basements. It shows how really fragile are those entities we call “states”. For whom is the Ukraine bell tolling?

    5. The economic collapse of Italy. What is most shocking, even frightening, is how it is taking place in absolute quiet and silence. It is like a slow motion nightmare. The government seems to be unable to act in any other way than inventing ever more creative ways to raise taxes to squeeze out as much as possible from already exhausted and impoverished citizens. People seem to be unable to react, even to understand what is going on – at most they engage in a little blame game, faulting politicians, immigrants, communists, gypsies, the Euro, and the great world conspiracy for everything that is befalling on them. A similar situation exists in other Southern European countries. How long the quiet can last is all to be seen.

    6. The loss of hope of stopping climate change. 2014 was the year in which the publication of the IPCC 5th assessment report was completed. It left absolutely no ripple in the debate. People seem to think that the best weapon we have against climate change is to declare that it doesn’t exist. They repeat over and over the comforting mantra that “temperatures have not increased during the past 15 years”, and that despite 2014 turning out to be the hottest year on record.

    7. The killing of a bear, in Italy, was a small manifestation of wanton cruelty in a year that has seen much worse. But it was a paradigmatic event that shows how difficult – even impossible – for humans to live in peace with what surrounds them – be it human or beast.

    • “But it was a paradigmatic event that shows how difficult – even impossible – for humans to live in peace with what surrounds them – be it human or beast.”

      Humans are an odd species. Some are capable of incredible love, empathy and balance, while others commit acts that make our worst nightmares seem PG in comparison. The majority (I think) just focus primarily on surviving the drudgery of life’s demands. Whether it’s finding food and clean water or getting to and from work or finding the fees for the kid’s private education. They might care about the things the good professor cares about, but ultimately there are more pressing everyday concerns and risks that worry them.

      Others are just blinded by various ideologies across the political spectrum and can’t accept facts or opinion that don’t fit within their particular world view. Arguably the worst people, people like me, know what we’re doing to the planet is ultimately unsustainable (or at a minimum highly risky) but have long given up (on themselves and humanity).

      On a positive note, none of it really matters. Even if the trash planet for ourselves and other species, Earth has shown it’s extremely capable of bouncing back. It might take a few million years (or much less) before other species flourish again, but I believe the Sun still has a few billion years left in it.

      • interested party

        “Earth has shown it’s extremely capable of bouncing back.”

        That is the truth. Stop spraying roundup and the natural cycle kicks in to repair the damage. It is an incredible process that few care to spend the time to observe. We do have a chance, but will we take it?

      • migtronixMEMBER

        I think Robs point is the Earth will take care us then itself in the long run.

        I would have thought at some stage the peasants will wise up to the rank corruption and greed situated at the top of their to societies, but we all saw what happened to Occupy.

      • interested party

        I know mig.

        I live in hope that we dodge the bullet.
        In the long run, we are but a plague anyway.

        edit to add this bit…..
        Sometimes I sit and dream for another planet where people who understand we are part of an ecosystem and not the controller of one can go to….and leave this one to the [email protected]#kwits who outnumber the few. Let em swim in their own shit…..leave me out of it………but then I wake up

      • “In the long run, we are but a plague anyway.”

        Interestingly, a few years ago had a bunch of women on Facebook attacked me for not having had children. I was told to grow up and called some rather unkind things that I can’t recall now (by this point I had started to tune out). I should have asked why they think it is selfish, especially give the current population of the planet, but they were pretty aggressive and scary! I wonder if that is a common perception of non parents. We really are a funny species!

      • The melting Arctic – John Nissen’s emergency call to action

        Nissen points to a remarkable decline in sea ice thickness as proof of this. “The Arctic has started a vicious cycle of warming and melting. It’s the start of a whole meltdown of the Arctic ice cap. It has to be stopped”, he says.

        “In fact, the September sea ice volume is already down 75% with a trend to zero by September 2016, suggests that the Arctic is heading for complete meltdown, which would be a planetary catastrophe.

    • yep, on all important EU parliament became US congress. The only differences left are minor or pointless once

    • Thanks BB. I shudder over future unknown unlimited body corp fees – they simultaneously suck cash and hammer property values. Just wait till the lifts get a few years up – phew!

      reposted fb DBN!

    • Thats pretty much the sort of treatment you can expect at about half the apartment complexes in Northern Cyprus….

      The stealing of electricity date cables etc to construct the place next door is a profound low but charging the body corporate to represent the company before VCAT is fairly lacklustre too.

      I know of a couple of stories like this – I dont think this person is alone in their experience.

    • The developer is leveraging their authority.

      Changing the apartment size, or modifying an OC agreement, after a contract for purchase has been signed off on, provides a legitimate reason to leave.

      I’ve attended seminars where lawers, who generally represent developers, speak about how area changing is to be avoided at all costs. It gives the buyer who may be having second thoughts a free pass out.

      Like a lot of things land related it is the perceived authority of the landlord, developer or banker that intimidates people into not pursuing their rights and interests.

      • and the fact that developers still owns commercial part of building gives hope that money could be paid back.

    • Wow! The developer, who does not posses any moral decency, is getting away with what they are legally allowed. It’s those who allow this shit to happen are the ones who should be handed over to ISIL.

  2. migtronixMEMBER

    Using micro price data underlying
    the Swiss CPI we find that a substantial share of asymmetries in the frequency of
    price changes can be traced back to a rising aggregate price level. We show that
    asymmetries would be reduced substantially in the absence of aggregate inflation.

    So, wait? Are they saying that central banker induced inflation is actually the cause of all the volatility that allows their corporate counterparts to make so much money going long and short?


  3. Guys, I’m looking forward to this year,
    I have no idea about what is going to occur, but I suspect it wont be good.
    What is for sure, is that the commentators on this site will have (generally) unbiased views and insightful forthright comment.
    Thanks for your efforts and lets all make it through this year. WW

    • Ditto, WW.

      You may have noticed me banging on about a renaissance in manufacturing and agriculture on the lower $A.

      It won’t be orderly and seamless, but it will pick up.

      • Agriculture maybe but manufacturing? We do some pretty good high tech shit but the ‘nuts n bolts’ manufacturing that employs a bunch of blue collar workers has been decimated. I dunno, like to think positive but….

      • Manufacturing is a bit like mining iron ore, those who are already established are pushing the limit so the new entrants cant profitably start up, add oil to that metaphor now.
        Modern manufacturing is so far removed from the manual processes we are used to in Straya that no one could write a viable practical business plan for the venture.
        We will never see large scale say white goods manufacturing is Straya again, hence all this bull shit about diverting the unemployed and future unemployed to unviable projects like the Gallilee basin. This year is going to highlight all that is unbalanced in the economy.WW

    • I’m real up beat about 2015 all my business metrics look fantastic, frankly I haven’t seen this positive a market since …well 1999 pre tech wreck

      The venture capital market place is looking amazing because Corporate America is all cashed up and is finally loosening the purse strings, M&A opportunities abound, Tuck-ins opps out the yin-yang and a resurgent IPO market ….who could ask for more? Only wish I had more product in the pipeline. The way its looking I’ll be busy all year just putting lipstick on all my little piggies …[email protected]#$% there’s even takeover demand for our losers.

      I get the feeling that Mr and Mrs Joe Sixpack are tired of being depressed and just want to party so let the party begin!

  4. Says it all really. Substitute ‘economics’ and ‘QE’ from place to place in this piece and the results are the same….Happy New Year….

    “The war against terrorism, developed by George W Bush in the hours after 9/11 with little consultation with his own military or cabinet, let alone his allies, is one of the great failures of the rightwing mind. The reflex reaction to an act of mass terror was not to outsmart, out-think and marginalise the new enemy – it was to get even by being even more violent, lawless and vicious, leading Nato into the Afghan quagmire, and the coalition in Iraq. Two trillion dollars later and hundreds of thousand dead and displaced, the world is predictably much less safe for the west than it was – and jihadism is much more entrenched……But this needs to be part of a wider national reckoning. Right-of-centre thinking has triggered the near collapse of our banking system…..and now lost us a war. Learning nothing, the right offers more of the same – uncritical acceptance of current capitalism…..Without change, further disasters and decline lie ahead”


    • As a former military type said to me the other week; “the fact we’re back is a pretty good indicator of how the first and second efforts went”.

    • The war against terrorism, developed by George W Bush in the hours after 9/11 with little consultation with his own military or cabinet, let alone his allies, is one of the great failures of the rightwing mind.

      and that’s why his sweet talking fake lefty successor pursued the idea even further.

  5. http://ineteconomics.org/new-economic-thinking/bill-mitchell-demystifying-modern-monetary-theory

    Bill mitchell interviews very well I think and I wonder if he could be successful in politics (would need to lose the earrings)

    Keeps to the key points
    Simple explanations

    Of course he doesnt really delve into the mechanics of money too much but I can see the average bogan sort of understanding the idea behind not wasting productive capacity. Maybe if it was sold as a pseudo work for the dole scheme to satisfy the need for punishment

      • And yet people are still accepting our IOUs even though we run a CAD (just like the UK, USA etc etc)

        What is your point?

      • That it seems to be consistently ignored when MMT’ers talk about being able to issue currency with no limitation.

        “governments face no FINANCIAL constraint in regard to supporting policies that generate full employment”

        “sovereign government cannot become insolvent in its own currency”

      • Totally agree, the best example I know of a successful MMT country is North Korea, they can run a nuclear weapons programme but need to sell black market weapons for USD, and as Flawse would comment, Barnacle Bill, never takes into account, the fact that the only reason we have external parties accepting our IOU’s is that we are prepared to fund our CAD via the sale of our income producing assets.

      • @BB,

        Your hyperinflation phobia is a reoccurring self inflicted cognitive impediment, looking at MMT with bimetalism metrics is akin to having a tooth ache and reading up on erectile dysfunction.

        If you had bothered to actually read, inform yourself, wrt MMT you would see that – know where – does it ever state “being able to issue currency with no limitation.”


        “governments face no FINANCIAL constraint in regard to supporting policies that generate full employment”

        This does not suggest limitless currency issuance, only that it should be issued to support policies to generate full employment.

        Compounding error

        “sovereign government cannot become insolvent in its own currency”

        Pray tell how you can go broke to yourself, can the sun or the creator mythos send itself destitute in absentia, are electrons commodity’s or the goods and services they represent.

        BB you end up invalidating your statement right off the bat, by projection, which furthermore, lends to gross inaccuracy’s.

        Skippy… What you might want to consider is what ideological agency welds our currant payment system and what its agenda is…. before bemoaning object fetishes. Heaps of easy to read and digest MMT primers out there and lots of folk willing to unpack it all.

        PS. what if sovereign money is just a tax credit at the end of the day…. eh…

      • migtronixMEMBER

        Rubbish skip that’s exactly what it means! Since no one knows how much “support” a JG eco needs the consequence is infinity is doable.

        BTW Venezuela is pure MMT. Check out the inflation rate skippy

      • @skippy, hilarious. You accuse me of projection and then in the same breath suggest I’m looking at things from a bimetallism view… on what basis do you make that claim? Can you link me to the comment where I’ve shown support for a return to a Gold standard?

        Had the same discussion re solvency in another thread…

        “From an accounting perspective a government can’t be insolvent in their own currency (that is, owe debt that they can’t print to pay off), but they sure as hell can be from an external position and let’s face it, if another country was to reject payment in their currency/debt, how much longer are the internal constituents going to accept it?”


      • You do understand trade shocks are what proceed inflation in this context right Mig-o, and that some are still pissed their military coup did not go off as planed in Venezuela, going for round two???

      • BB,

        Your take is quite heavy in the commodity theory of money, that’s quite evident.

        Skippy…. again I’ll point out the 1800s just for a short time frame, reconcile that history please.

    • One of biggest impediment to our country revitalising itself is a tax system that allows family trusts to sit on old CBD properties that are vacant, run down and basically derelict, purely for land banking. I was down near Central Station in Sydney on Monday and was amazed at the amount of derelict property in that part of Sydney.

    • Thanks for the link Coming,

      That didn’t demystify anything for me at all. Im actually more confused/disturbed about this MMT principle than before.

      Gather this MMT idea is just really a massive government spending initiative. Work for the sake of work is consistent with the rise in the BS job to support the whole mess: crews of OH+S advisors, work psychologists, gov supervisors, public relations, compliance, policy, legal and marketing also. I actually suspect these professional cling ons are close to the heart of the structural problem.

      His example with digging holes and filling them in is just ridiculous. Just where is the demand for labor going to come from in future given it can always be found in other countries for cheaper? Union demands, minimum wage + superannuation and OH+S requirements priced us out a long time ago and 457’s snuffed out the youths development opportunities. Robotics and automoation are on the horizon and ignoring technology changes is just a complete waste of peoples time and tax revenues.

      25 minutes of my life that’s not coming back.

  6. I fled the BBQ conversations about what a wonderful investment resi RE is and found this on Fairfax: Jeremy Warner predicting $20 oil. That’s a big call, but we live in an interesting era of savage commodity price deflation and anything is possible.

    Hydrocarbons that cheap would devastate our brand new NG liquifiers. If Tone wants a new tax, increasing the fuel excise ’bout now might be a good idea.


    • DC I read some good arguments over the break for oil, iron ore, copper, coal, cement, all going back to their say 1990 marginal cost of production. the general consenus is that the demand for those commodities in China has been very much overestimated, now they say based on dodgy growth figures provided by china. LIke that airliner, seems the lot is going to stall, then crash.
      The news in the West Australian this morning is how everyone is going to enjoy fitness classes on the beach, to some how generate lost revenue from the mining collapse. The other news is that the Kiwi is near parity with the AUD, Hows that for embarrassing. Ewe would never have thought a bunch of farmers could knock us off. WW

      • Bunch of farmers?! How rude…..
        WE know how to run a proper 21st century economy; one based on endless consumption and asset speculation.
        What you cobbers need to do is get with the programme! Drop stamp duty ( NZ= none); scrap capital gains ( NZ= 0%; there is supposed to be an Income Tax applicable – but lying easily takes that out of play) and scrap your FIRB ( if you do indeed have one!) and allow unlimited speculation by any global citizen who so desires to, as we do.
        Farmers, indeed….Even those that do imitate those hard workers of the past know where the real money is. It’s not in the primary sectors’ produce….it’s all in the land “value”, just waiting for someone; anyone, to come along and unlock it for us.

      • J Good morning, I knew you would bite.
        If I had my way Id be wearing a swandry down around Ngaruawahia, on a sheep and kiwifruit farm. But the grey and the fog of the Waikato sent me back to the sunshine.
        Have a good year and thanks for your contribution and insight from across the dutch.WW

      • MIg, till they find the black box, its all conjecture.
        Ive flown a bit of time in the intertropical convergence zone and those thunder heads are frightening,
        But the skipper was x military f-16, with 20,000 odd hours, and at the end of the day he was pilot in command, despite air traffic control advice.
        Should structural failure be the cause there may be lots of aralditing of those plastic planes. WW

      • WW,

        Air line pilots are more like passengers these days, which is compounded by the one stop shop maintenance facility in indo.

        Skippy…. several friends are long haul international captions, one is a footy dad on my sons team.

      • Skippy, you are right, one of the reasons I gave up flying was you are just a caption, up in the front office.
        The major drama you had for the day was some passenger lost their baggage.WW

  7. Bit old, yet a classic case of not learning from past mistakes:


    “The Central Bank has underlined concerns about the rapid rise in house prices in Ireland.

    In a review of risks to the Irish economy, the Central Bank noted that house price growth in Dublin is now higher than that recorded at the peak of the property bubble in 2006.

    House price growth in Dublin has been above 23% since June.”


    On another note, had a conversation with a friend last night who told me that locally it is a “buyer’s market”. I told her that if I read The West and watched 7 nightly news I’d think so too.

    That conversation didn’t go very far, heh.

  8. 6. The loss of hope of stopping climate change. 2014 was the year in which the publication of the IPCC 5th assessment report was completed. It left absolutely no ripple in the debate. People seem to think that the best weapon we have against climate change is to declare that it doesn’t exist. They repeat over and over the comforting mantra that “temperatures have not increased during the past 15 years”, and that despite 2014 turning out to be the hottest year on record.

    Hopefully 2015 is a year that Carbon related anthropogenic climate change is jibber and the vested interests are all revealed as fraudsters, and the only anthropogenic climate change is happening through the Urban Heat Island Effect as well as tall buildings changing the natural air current flow.

    • the best weapon we have against climate change is to declare that it doesn’t exist

      Your idiotic comment proves Bardi’s point. 🙄

      • Mig-i,

        Sea Ice formation has little to do with Glacial ice, so whats your point again?

        “Pffffft data! Gimme computer models any day right?” – mig-i

        Yet you are slavish about consumer meta data and believe software is better enabled to adjudicate loan processing?

      • migtronixMEMBER

        How do you get a glacier in the sea skip? Nutter…

        Man you don’t ever listen do you? I don’t think loans from nothing should exist. Duh.

      • Mig-i,

        What correlation are you trying to suggest with increased local sea ice wrt AGW and what if any similarity does it have with Glacial ice as a factor of planetary change.

        Skippy… loans from nothing???? talk about nutty…

  9. All right folks, I continue to be not stunned by the banality, repetitiveness and childishness of the comments here over the break.

    So here’s the thing – for the next two weeks I’m just going to close down those who continue this behaviour.

    You have today and the weekend, but after that, I’ll give one warning and you’re out for the duration.

    Comments are supposed to ADD to the discussion, not detract from it.

    Rest of you who have good, constructive comments and want reasonable debate, please continue!