Weekend Links 28-29 May, 2016

Moon Over House Desmond Digby

Moon Over House, undated, Desmond Digby (New Zealand, Australia, 1933-2015), Art Gallery of NSW

 

China

Asia

Europe

United Kingdom

United States

Americas

Terra Specufestorus


Commodities

Capital Markets

Global Macro

…and furthermore…

…..for the afternoon session

National Press Club Address: Treasurers’ Debate – Scott Morrison & Chris Bowen [Video] – ABC (1 hour)

Comments

  1. haroldusMEMBER

    Watching CJoye on Fox on the Xbox waiting for the cricket to come back. ( I wouldn’t if it wasn’t for access to cricket)

    I used to think he was captured but he seems pretty anti low interest rate property bubble.

    Watching him talk he seems pretty reasonable about lots of stuff.

    Also he’s looking like Henry VIII

    • GunnamattaMEMBER

      I think a lot of pro real estate spruiking types (or those who have been in the past) have started to come around to the financial system implications of having that big a housing bubble, and stress (for good reason) about the impact lowering rates sends to those of the speculation mindset.

      I agree with HnH that rates need to come down (even from here), but I would like to see a far far more overt address to the nation (from both sides of politics) to the effect that because of the implications for the financial system (if no other – and it could easily be the implications for inter generational equity/justice) then Australian simply cannot afford to have house prices go higher in real terms, and that that leaves Australia either needing to reduce them in real terms without reducing them in nominal terms (ie the dollar comes down) or having to experience an actual drop in nominal real estate prices. Indeed I would like to see someone publicly state that house prices are, in fact, central to the economic malaise and predicament Australia faces.

      Of those two choices I would observe of the drop in real prices – but not [much] nominal prices – requires the ability of the RBA/ASIC and both sides of mainstream politics to take the investor sentiment out [and do it quickly], as well as to do something about the institutional settings (Negative Gearing and Capital gains first and foremost, but also SMSF’s, landbanking, local council funding of services, illegal foreign buyers and state government addictions to stamp/transfer duties) – which, to be honest I dont think possible. But if it is to be possible then it offers the possibility that Australia may in fact be able to cultivate some sort of genuine economic rebound and try to set off on a path towards a cohesive economy (not that I think that likely). That for mine is a very very very long shot from here.

      The other is to have the drop in nominal prices. The issue I tend to see with that is that the economy is so addicted to rising house prices that it would kill retail and consumer spending, lead to a painful bout of unemployment, probably do massive damage to bank balance sheets, blow the Federal (and States) budget to smithereens, and presumably bake a generation brought up with the idea that the ‘only’ way to make money is to lever up and buy houses. That may be a very confronting experience in an economy which has offloaded its competitive and globally significant productive assets, and it is an experience I have some sympathy for those wishing to avoid.

      My guess at the moment is that what we will get is this continued avoidance of mentioning the subject of house prices, which the spruiker mindset reads as they will be pushed higher forever and therefor they will continue to lever into, while at the same time there are increasing numbers of people rightly identifying that Australia will simply never ever have a competitive economy without doing something about the economic millstone which absurdly high house prices represent and of the future economic millstone being put in place by asking those who will work in the future to pay through the nose for their housing (which has the effect of making the individuals hold off on other socio economic agenda items – kids, location flexibility, investing in careers, which flows through to the behaviours of those people as employees, which along with direct land cost issues implicates itself in the cost of doing business, and locks the banking system into a need to source funding for the purpose of sending ever greater amounts into keeping a housing bubble up, when the banks could be sourcing, and should be sourcing activities which could generate an actual economic dividend).

      This spread between the pro real estate boosters and the real estate unbelievers (consider me firmly in the latter camp) widens to the point where a great unmentionable (and I would still argue housing isnt the factor it should be even in this election, and is not being remotely well articulated – being left to the ALP policy on Negative Gearing either will or wont cause prices to fall) blocks parliamentary and administrative address and adds to the seizing of the national economy, and then adds to the economic meltdown required in order to get those in the legislative and regulatory worlds to address the economy.

      Joye is presumably seeing something about there with implications (he is a financier) for the ability of the system to access funding from offshore – particularly if the RBA drops rates enough and all of a sudden the global capital set start to wonder about the volumes and the returns they get from being that heavily exposed to Australia (and an asset which – although it has had a smooth sail to here or abouts – has issues in terms of liquidity for those funding it to get out of if things turn to merde).

      The only way I see out of the impasse is to have the political wing announce something in line with what I refer to above, the regulators come on board, and people get the idea that house prices are either going nowhere, or coming down – and that those panel beaters with multi million dollar portfolios backed by interest only loans had best move out in an orderly manner.

      For First home buyers, owner occupiers and maybe older pensioners with no other assets I would look at – in an environment of falling or stagnant house prices – some form of tax concession to enable them to effectively lower the cost of the social good they need. For those who have gone long and hard on the speculative end of things I’d be inclined to hand them a slip of paper with the words ‘caveat emptor’ written on it.

      For the banks I would be inclined to suggest that the government will bail 3 of the 4 majors and that the other – and the competition to work out who would be the one would be something revolving around lending for economically effective purposes – will become a ‘bad bank’ into which all the dud real estate portfolios that cant actually be sustained in the new economic imperative aware banking system, so that over time it passes into the nether world of ex banks.

      Of course none of that will happen. What will happen is that at the first sign of difficulty the meltdown will be underway, and from there the government will feel compelled to throw its dice for a rebound in the real estate ponzi, locking in 4 zombi banks and a zombi economy fuelled by population ponzi, and a society sitting on about more land per head than any other, wondering about why it is so expensive as they board the plane for anywhere else offshore for career purposes, while their homeland becomes a casino, tourism, financial laundering, property developer, sunset years for the elderly type regime of the type Cyprus so well embodies – presumably with lots of strip clubs and quasi gangster affectation all round.

      Lord only knows on the Henry VIII beard

      • haroldusMEMBER

        Wow hugely considered response to a flippant comment. To be honest my comment didn’t deserve it.

        In his defence CJ has been aware if not bearish to property for a couple of years.

        I am not defending him! Just was surprised about how negative he was on TV tonight.

      • GunnamattaMEMBER

        I wasnt attacking him (or you for referring to him) – and would presume what he said was good sense.

        Your mention of him in the context of him being somewhat gloomy vis the RBA cutting rates (and I have heard he has been very critical) made me mull over about why.

        In cricketing terms your opening delivery was a medium paced loosener pitched about 4 inches outside off on a fullish length….

      • haroldusMEMBER

        And fuck yeah but will it happen?

        For those who have gone long and hard on the speculative end of things I’d be inclined to hand them a slip of paper with the words ‘caveat emptor’ written on it.

        Who was it the other day with plans for QE based on tax paid? That was a brilliant idea and he/she/it had it developed pretty well apparently.

      • sydboy007MEMBER

        i’ve yet to hear a convincing argument as to why rising home prices is good.

      • My pick for the name of bad bank is: No one saw it coming no savings just loans bank

      • QuentinMEMBER

        From experiences on auctions on Sydney Nth Shore this afternoon, the bubble is back and big (if it ever went away). Several hundred k over reserve big. Can’t speak for the whole City but anyone thinking MP or even election nerves are having any effect here is talking out of their arse.

        With XJO now at highs not seen since Aug 2015 I may spend Monday reducing (moreso) my remaining holdings in any way linked to financials or AUD earnings.

    • The Patrician

      3yrs ago Chris Joye warned if the RBA cut interest rates to record lows, that already record high mortgage debt and record high house prices would dangerously increase further.
      Chris Joye was right

      • The don’t call him pungently accurate for nothing.

        The Chief Kool-Aider himself, Switzer, has called him the bubble boy for over two years, after his earlier bubble calls. He definitely wasn’t the first to call it a bubble, but he was one of the first in the MSM that’s for sure.

  2. If that $4 morning cappuccino makes you happy and more productive at work, it’s well worth it. On the other hand, a lot of Americans eat a pastry or donut for breakfast, which is a really bad idea (but not for financial reasons).

    • haroldusMEMBER

      how about this for a a business idea.

      if a coffee provides productivity benefits for $4 a pop how many BJs can I have my potential staff deliver per hour?

      $10 for 15 minutes doubling every increment?

      happy ending for everyone!

  3. AFR … New apartment resale prices tumbling in Melbourne … behind paywall …

    http://www.afr.com/real-estate/residential/vic/new-apartment-resale-prices-tumbling-in-melbourne-20160527-gp55xa

    Apartments in Melbourne’s Docklands, CBD and Southbank are being resold up to 24 per cent below their previous off-the-plan purchase price, catching out vendors, many of whom bought them from investment companies or spruikers.

    AFR Weekend has found numerous examples of such apartments, most of which are small studio or one-bedders, acquired after the global financial crisis.

    The revelations come as concerns build about an oversupply of apartments, as a record number of completions loom, and following Macquarie Bank tightening its lending to high-rise apartment postcodes, including in Docklands, the CBD and Southbank. … read more via hyperlink above …

    • “many of whom bought them from investment companies or spruikers”
      Note the use of language, when prices are rising they are property developers or real estate agents, when prices are falling they are ‘spruikers’.

    • A quick search on realestate.com.au for properties in Docklands alone shows 2,396 apartments for sale. The prices would need to come down a lot more from where they are to represent good value. I haven’t even taken strata fees into account, let alone the fact that many of them are built poorly and could easily catch fire with the flammable materials they are using to build these dogboxes.

  4. Whilst ever the trodden path
    Was underfoot endured
    And a thousand ignominious
    Injuries inflected, and more
    Besides
    Still with a will
    Wraught from the most
    Fatigued and iron wreathed
    Confines of this sullen
    Oblique rhyme, or better
    The insufferable dilemma
    Upon us to be bestowed
    Engraved in transgender
    Bathroom Walls….

    There Is a light that never goes nos out

    • GunnamattaMEMBER

      Well Clear of the Prawns

      The revolution is not so much never ending as eternal
      And the blue haired aunts no longer slip the tongue
      The ship of state still seems to hold the kernel
      But a wheezing noise emanates from its one remaining lung

      St Ignatius had an answer tho he drove good men to drink
      It’s said that St Joan of Arc simply never ovulated
      It seems the quest for purity still is a cause for which to sink
      And the utility at the margins is, as always, overstated

      The spider is on the board but legs are wriggling
      Perfection screams that all should be thus pinned
      What the baying wolves and chanting monks are saying
      Is that they know that someone somewhere may have sinned

      Tom Toms permeate the background as the strides reveal the schlong
      The Children eating Dingos enquire if there is nothing more
      The contract steeped in vinegar less they’ve left the indicators on
      The judges on the sidelines, nod and wink and scream encore, encore

      Aghast the barest breast awaits the ritual to commence
      Splendid are the rows of peering eyes
      The Minarets always echo with the chiaroscuro dimmer on
      The reception always picks up when the old lady shows her thighs

      The moment’s quickly waning and the light’s becoming dim
      There may be a final victor in the struggle between the light and dark
      We might market test the bastards and pay homage thus to Him
      Though fashion is always over rated and nakedness always stark

      But the siren goes a second before we face the finality of a result
      The combatants relax, and cast their eyes to recommencement in the dawn
      With productivity levels maximised the day ends in near tumult
      And when we dine in Coober Pedy we stay well clear of the prawns

      Gunnamatta, 2002

    • The Traveling Wilbur

      Now there’s what I’ve missed the most. Try doing that on Twitter. Rubbish platform. Good to have you back where you belong mate.

      And I was just about to post something about my 6am morning walk and early buffet breakfast on the GC ‘boomer experience’ (as in surrounded by) but no longer feel the pain need. Cheers!

      • For you Wilb any time! And you were bang on with Prince the other day, dude was onto it

    • Mav, here is another super sad story, where this dude who has been ‘ponzied’ (I have created a now verb today :)) drove his SUV into a bunch of school kids killing one, just to get the authorities to investigate.

      The economic interest is that it shines a light on ‘private lending’ and leads me to wonder just how big it might be, as the property in many cities likely most cities is unraveling.

      http://english.caixin.com/2016-05-27/100948576.html

      • TailorTrashMEMBER

        ” Daxin has no money at all,” said one city official who asked not to be named. “Winning a lawsuit is useless.”…………….and where is the money?
        ………Sydney or Melbourne realestate might be a good place to look …….

      • “I’ve created a now verb today”

        And you’ve created now as an adjective too 😉

    • Original John

      Thx Mav – I am in Shanghai atm and I have said for a few months that the run-up in iron, rebar and other commodities is not real and not related to the “stimulus” directly. It is nice to see these articles being posted, I have shared with some friends here in Shanghai and it does not surprise them – this is just the tip of the iceberg. Shit will hit the fan in August…. even sooner if the RMB drops.

      Please keep these articles coming….

  5. interested party

    Haha… and WHS decide what’s safe for you at work…..?

    https://youtu.be/W7A7s1A9lLQ

    Transcript from 4:26 till 4:50…..”corporations routinely sacrifice the lives of some of it’s customers to increase profits and we are all better off because they do. That’s right. We are lucky to live in an economy that allows corporations to increase profits by intentionally selling products less safe than could be produced….”

    The specufestors would most likely agree with the message though..

  6. But with Tesla moving toward half a million units of production per year, and in the wake of accusations that it pays foreign visa holders as little as $5 per hour, the electric car maker is being watched very closely by the union, UAW President Dennis Williams said last week.

    “We just believe workers ought to have a voice in the workplace, and they ought to have collective bargaining rights,” he said.

    Tesla denied any knowledge of underpaid foreign workers at its Fremont, California, plant in a recent blog post, arguing that subcontractors are responsible for any potential violation of labor law, but the company doesn’t deny that it works its employees hard. In a statement responding to the UAW’s overtures, Tesla said:

    There is no doubt that Tesla employees work harder than most. Changing the world is not a 9-5 job. We make this very clear to all candidates when they apply to work at Tesla. At times, during heavy production ramp, some shops in the factory may have to work on Saturdays. We give everyone advance notice when this is required to ensure they can plan their schedules accordingly. We also provide alternate work schedules for many of our production shops that include compressed work weeks allowing for more flexibility and schedule predictability.

    This is a generous picture of the working conditions at Tesla, at least according to such job-review websites as Indeed and Glassdoor.

    Though some current and former Tesla employees describe the company as an intensely challenging and thus rewarding place to work, the widely shared verdict is that it allows for little work-life balance.

    Many employees describe 12-hour shifts and six-day weeks as typical—if not mandatory—and describe a wide range of health, family and morale issues that arise from Tesla’s hyperdriven corporate culture.

    And though the company maintains a startup-like pace as it rushes to meet Chief Executive Officer Elon Musk’s ambitious goals, worker reviews indicate that the flexibility and mobility of a true startup have evaporated as the company has grown to support a workforce of more than 10,000 full-time employees.

    It’s a fascinating dynamic of American working life: Though Silicon Valley’s startup culture has opened corporate America’s eyes to a lack of drive, mission orientation and flexibility in its own work cultures, so too has the startup mythology blinded many to the exploitation of workers.

    In the early stages of a company’s development, long hours and relentless pressure are rewarded with both the flexibility to work on a variety of intellectually satisfying projects and equity positions that leave early employees independently wealthy.

    http://www.newequipment.com/Main/topstories/Worker-Discontent-Makes-Tesla-a-Union-Target-1414.aspx?NL=NED-09&Issue=NED-09_20160526_NED-09_340&sfvc4enews=42&cl=article_1_b&utm_rid=CPG03000001537258&utm_campaign=12341&utm_medium=email&elq2=3f773086dcc04ccda43afdaef996f3b9

    Disheveled Marsupial…. Cha.. Cha… Changes

    • Zeno of Citium

      Sorry bit this is just a massive beat up by vested interests pushing astro-turfing in order to discredit Tesla.

      The underpayment was from a sub-contractor – absolutely NOT Tesla employees. Elon immediately suspended that contractors work, he PAID the workers the outstanding amount and shifted them to a new contract.

      Since then there has been an unending stream of Tesla Underpaying workers – its horseshit shovelled out by Ford et al.

      • Got a link or anything.

        “The underpayment was from a sub-contractor – absolutely NOT Tesla employees”

        Bit of boiler plate there, well known method of risk management is the use of sub-contractors as a arms length approach e.g. if Tesla is not aware about what is going down on site or via off site subs its their name and product that will cop it.

      • Skip, Tesla gave the contract to a German company who are paint shop specialists. This German company sub contracted to another company who then employed this person. Tesla agreed to pay $55/per hour labour charge as part of their contract. A judge had already dropped Tesla and German company from legal liability in the suit filed. But Tesla still accepted moral responsibility and said they will take care of this person.

        https://www.teslamotors.com/blog/response-mercury-news-article-hidden-workforce-expanding-teslas-factory

      • Thanks mav…

        So that leaves all the rest to be deliberated on and how it will eventually wash…

      • That’s UnAustralian, mate!!

        What you really do, is you “7-11 it”: Get an independent commission headed by Alan Fels to investigate the living fuck out of it, then fire them when they start getting too cocky, and then say you’re going to sort it out yourself, or that you’ve already sorted it out, or that “oh – look, I guess there are no complaints about wages from anyone… I guess this was a false alarm”. Case solved!

        Now *THAT* is how you fix it! None of this “give them their owed money” shit… that’s not going to get you anywhere if you give any Tom, Dick and Harry money for working for you.

      • and by accepting moral responsibility Musk thinks shift blame, cover it up and make sure it doesn’t hurt his egotistic picture of himself as seen by poor who unknowingly finance his narcissistic quest.
        Moral responsibility means accepting blame and asking for a punishment for an immoral act or omission of a moral act. In this case he failed to act according to moral obligation to prevent this from happening (not only that he went into subcontracting model to get the benefits but to avoid blame of such immoral acting) and his response is to blame someone else?

        Musk is just another Donald Trump with gen Y appeal – not even a bit better in any way.

      • ErmingtonPlumbingMEMBER

        “New car, caviar, four star daydream,
        Think I’ll buy me a football team”

        I’m with the Doc, the guy is a poser, Just like Trump but Cool.
        Sections of the left Hero worshiping this Guy are just as stupid as those who hero worship Trump,……
        Well, maybe a little less stupid.

    • what a cheap propaganda. Even if we assume that his failed egotistic and corrupt business is something about changing world it’s clearly not for $5 employees who are there to survive in the world where every once in while Musk gets $500m of their taxpayers money while risking nothing and they get taxes and lose health, families, lives …

      There is nothing world changing in Musk’s taxpayers supported quest, at least not anything good for the world

  7. Apparently there is a shortage of hotels in New Zealand – 29 short if you believe the experts. Yet nearly 6 years on from the first earthquake, Christchurch itself still has not reopened 24 of its hotels – and they’re not small ones either – the likes of Holiday Inn x 2; Millennium; Copthorne x 2; All Seasons x 2; Novatel; Ibis; Crown Plaza – the list goes on. And why? The Government and/or the insurance industry cannot afford the cost of reopening/fixing them. But, hey. We are the Rock Star economy, until you actually have a good listen to the songs….
    http://www.newzealandtrademanual.com/wp-content/uploads/2011/05/christchurch-accommodation-operators_closed-as-at-3-may-2011.pdf

    • Some of my best twitter pals are kiwis J, I’ve asked @DavidSlack his opinion, it’s usually hilarious!

    • “Dismal that the only question they seem to have been asking at their housing crisis brainstorming meetings is: who can we blame?” @DavidSlack

    • And now, after having failed to impress the intelligentsia and power brokers on planet Earth, the tragics have moved to try and prove global warming on Mars

      And where in that article is there any mention of global warming? And what makes you think “the intelligentsia and power brokers” don’t accept the science of anthropogenic global warming?

    • Zeno of Citium

      There are better ways to publicly humiliate yourself – like wearing your underpants on your head stark naked at Bunnings – not nearly as effective as denying global warming, but still – probably more fun.

      Carbon Dioxide was established as a Green House Gas (along with many others) back in 1856. Denying that they have a warming effect is like denying that water freezes below zero, or that it does not boil and turn into steam. Its a FUNDAMENTAL basic scientific fact we have known for almost two centuries.

      We KNOW the properties of elements and gasses – its what the PERIODIC TABLE IS – we KNOW what Carbon Dioxide does – trying to claim otherwise is without any doubt, more publicly humiliating than as I said, wearing your under pants on your head, stark naked at Bunnings demanding a free sausage because Obama is a lizard person – its just beyond ignorant on the most extreme level of stupidity.

      Its called – SCIENCE. Try it out some time.

      • haroldusMEMBER

        wearing your underpants on your head stark naked at Bunnings

        Hey! What I do on my weekends is my business!

        Actually a joke as I have boycotted Bunnings when they went through my missus’ bag the other month. They’ve lost themselves at least $200 a year in balcony garden supply sales. Talk about shooting yourself in the foot, right.

        Also disclosure am firmly in the AGW camp and cannot understand how otherwise intelligent people don’t get it. I first heard of it in marine science lectures at uni and it changed the way i thought of the world. Probably made me a lot more misanthropic too.

      • Harold, good on you for boycotting Bunnings. That store has the most grotesque markups! Case in point, Bunnings has discounted their Ryobi 350W band saw from $299 to match the $129 Aldi special sale price … and they are not losing on that deal, let me tell you!

      • I’ll tell what else is called science, being able to make predictions, you know, ones that pan out. London under the sea yet? Because science

        Hi boys, yet again I feel some tension in the air over this corner. Please be aware that I do drop by, and do remove anything which looks like it is overly directed at another commenter. All questions on spam management are welcomed at [email protected]

      • Actually Mig, your Popperian definition of science (“I’ll tell what else is called science, being able to make predictions,”) has been debunked, even by Popper himself.
        Don´t spoil the thread

      • interested party

        Just some observations on this…

        The long term average max temp here in FNQ is 27.6C for May….. going back to at least 1956.
        This months average max is running at 29.2C with just days to go till months end.
        1.6 C above.

        The long term average min temp is 19.9 C for May… again… at least 1956…
        This months average min is running in at 22.6 C
        2.7 C above.

        We have trees flowering now that should flower in january.

        As I type this it is 31C. Let’s see if La nina can bring some relief and this is just a related anomaly. Fingers crossed.

      • haroldusMEMBER

        Actually on reflection I find that I DO want a free sausage because Obama is a lizard person.

        ***for some reason Foxtel on the XBox is not yet showing the cricket therefore I have returned to MB for whatever entertainment I can glean.

        ***this is also a joke as I have been a vego since the October long weekend 1994.

    • Hear, hear. Sadly, though, the aspirations of most of it are summed up in the reality of the penultimate paragraph.

  8. TailorTrashMEMBER

    “Moon over House ” …………how appropriate as we reach new levels of lunacy ………….

    • The LIBS and their supporters are actually proud of this policy. So it ain’t going to happen. Let’s just accept that large % of our population are deranged red necks and also believe such policies are keeping us safe from terrorists.

  9. haroldusMEMBER

    To answer my question about whether SPO was a buy, it’s a float from private equity.

    Therefore I guess the question changes from “is it a buy” to “Can it survive?” How much of its guts were stripped out?

    What piqued my interest was the whole long term contracts thing. And it looked like support around $1.00.

    I’ll do a bit more digging.

      • St JacquesMEMBER

        Unfortunately it is its own category, though it’s close to the SS Black, but the local cars do not come with the magnetorheological dampers which provide a very comfortable ride but excellent handling in three settings. Thing is, this car has a handling and spirit that makes the more technically sophisticated and powerful sedans from the luxury car makers feel like lifeless, overweight barges. Anyway, cars are becoming appliances and soon will be google eggs. lol

    • Weep? I’m popping a champagne cork to celebrate the end of the Aussie hoon V8 muscle car with its highly polluting internal combustion engine. Будем здоровы!

  10. I sometimes wonder if I’m the only person that’s tempted to take a Macro-Economics course with Billy Mitchell so that I can heckle/drum-some-sense into him. The main thing preventing me from doing this is the possibility, however remote, that I’d be converted to his way of thinking. I suspect that the foundations of my reality would be shaken to the point they liquefied, if I were to ever to understand Billy’s conclusions. You see the problem is that I agree with so many of the points he makes but disagree completely with the conclusion…it always leaves me wondering how is this possible?

    • The bit I disagree with most is his assertion that “fiscal surpluses (are) historically abnormal” if read as ‘they should be’! added to my view that he, like many others, believe that we can get back to where we all were in 2005 if we just create more public sector debt. Too many things have changed, and are changing, to have that happen. Technology and demographics being the big ones. Add in a dose of politics and social unrest, and all the fiscal relaxation in the World isn’t going to help this time around.

      • My problem with Bill Mitchell’s solutions is that I personally believe Australia has developed and operates two parallel currency systems. The one currency we call Aussie Dollars can grow infinitely and is priced to reflect the excess global capital that’s readily available. Today we have the absurd situation where the FED/PBoC/ECB/BoJ are all operating policy’s aimed to deliberately reduce the absolute cost capital, whereas the RBA is only operating at the margin, resulting in a local capital market that is in absolute terms dominated by the local policy decisions of foreign central banks.

        The second currency is residential Housing or more specifically Residential land. Unlike our Dollar our supply of residential land is kept deliberately in short supply. Every Australian knows this AND appreciates the implications of these supply decisions, as a consequence they hoard housing. Even our financial institutions explicitly recognize superior “value” of housing as a guarantee for any/all loans (just try to get a business loan in Australia with out Housing Equity to secure the loan, they’ll laugh you out of the building)…
        OK my point is that every Australian school kids recognizes the existence of these currencies and knows which one is likely to represent a long term reliable store of value. They exchange their Fiat money for these restricted goods as fast as they possibly can (heck they even borrow money abroad to acquire existing local houses), (IMHO it’s a weird kinda hat-tip to Say’s law)

        Like it or not what these Australians are actually doing is voting for the currency (houses) that will enable them to actually save in real terms. IMHO Bill’s solutions implicitly result in further devaluation of the Aussie Dollar relative to the Housing-Dollar, his solutions also assume that we’ve had a market where capital was in short supply and this shortage of available capital is what resulted in the diminished interest in deploying available capital for productive purposes…more capital …through fiscal intervention is unlikely to to ever the capital allocation problem that resulted from the intentional deployment of available capital for un-productive purposes (acquiring housing currency)

    • Whats so hard to understand about the state creating value esp. when at the moment all the value is sucked to the top under the guise of market efficiency e.g. debt can be put to broad social purpose or it can be used to make some incredibly wealthy and powerful. The latter seems to have extenuated itself about as far as it gets… all that is left is robots and a BIG to purchase their goods… then what – ????

      NC has been fronting a few Mirowski post you might like to ponder China-Bob…

      http://www.nakedcapitalism.com/2016/05/philip-mirowski-this-is-water-or-is-it-the-neoliberal-thought-collective.html

      Disheveled Marsupial… intellectually speaking… when one mob starts banning writing… you know there is nothing intellectual about it…

      • See mig its quips like that which actually harm your camps stance, esp since 007 & AMI stance is based on a system which only exists as a concept – too be applied – and not the one in function. Not only that but Bill is just one guy in Australia when in reality you have to deal with everyone else in America and abroad. Furthermore the confusion about the system we have today by those that forward 100% reserve, loanable funds, fractional reserve, nations going BK on national debt, et al…

        Disheveled Marsupial… never got a reply back on the other thread after your statements about interest bearing IOUs from you or 007…

      • Sorry skip I guess I missed, I most certainly would have given you a reply. The only question we’ve had for Mitchell (and @RalphMus) is why should private banks and only private banks create our credit for us. Pfffft isn’t as staunch on usury but I totally agree with Op8

      • They don’t mig…. Banks are just one part of a much larger system, but they don’t create HPM. Now if you want to argue that large cap banks, over a period of time, have become to big and exhibiting diseconomy of scale or as I have previously shown used lobbyists and other means to dictate how they are run we might talk about events and not money crankery…

        neweconomicperspectives.org/2011/07/mmp-blog-6-what-is-sovereign-currency.html

        Disheveled Marsupial… BTW its not just banks… as even Gunna pointed out equitys are a form of money… do corporations print their own money…

      • Evening folks,

        Just doing some ironing.

        I am not that far from Bill Mitchell in the same way I am not that far from Skippy.

        I agree with Bill Mitchell that there should be a larger role for fiscal policy – though I tend to think that a job guarantee will be less important if there is more money flowing in the parts of the economy where it should be flowing. People spending and investing will generate lots of jobs even if there are lots of robots.

        The key point of difference is that I see the real obstacle to appropriate and democratic fiscal policy is the competition that come from the bankers Pseudo fiat.

        Despite Skippy’s enthusiasm for accusing everyone of being a monetarist even MMT fans are monetarists in the sense that they accept that there is such a thing called inflation. If you accept that inflation exists then you are a monetarist in the broad sense of accepting that too much money may cause inflation.

        What Skippy probably means, though best if he confirms this, is that there is no simple relationship between money measures and growth or inflation. I agree with that and that is why despite Skippy’s endless and tedious accusations I am most definitely not a monetarist in the narrow meaning of the term.

        Getting back to the fiscal policy v Banker Psuedo fiat point.

        If you accept that inflation can exist then you have to accept that if Bankers are pumping out Pseudo Fiat and governments are pumping out real fiat inflation is a potential problem.

        IMHO – the core reason why neo-liberals in the FIRE sector bang on about small government so much is because they understand intuitively (even if they don’t really understand the mechanism) that government spending / fiat creation is competition for banker pseudo fiat creation and there is a risk a government may be inclined to restrict Banker Pseudo fiat creation to maintain room for the creation of real public fiat and thereby avoid inflation.

        As we have seen – when credit creation slows even as ZIRP approaches the Federal Government has been forced to run a deficit to avoid the economy crunching. If the government was not funding the deficit with debt but instead with 0% money creation and running a fat enough deficit (directed in an equitable and fair manner – say raising the tax free threshold and other taxes on labour) the economy would take off. Any banker with half a brain understands that if that happens a government might be inclined to keep doing things that way and wind down Banker Pseudo fiat creation powers. (in other words start raising reserve requirements or directly restricting credit creation by private banks) Bankers are in no hurry to become cardigan wearing intermediaries any time soon.

        MMT has a blind spot when it comes to private bank credit creation and it is unfortunate because restricting private bank creation of Pseudo Fiat would allow much more room for the creation of the real stuff. That stuff about MMT just describing the system is bull dust as every MMT fan I have encountered is a big lefty and they know that the point of MMT is to create room for activist government. I have no problem with that just don’t pretend otherwise.

        If you support a role for fiscal policy and public sector fiat creation you should support restricting banker creation of Pseudo Fiat. (Which I understand Skippy does anyway as he reckons the old regulation of banking credit creation between 1930s and 1970s worked just dandy and it sort of did).

        Skippy – I see you have still failed to demonstrate an understanding that there is a real difference between credit creation which anyone can do and credit creation by an Authorised Deposit Taking institution (aka a Bank). Until you get that point you keep imaging that the difference between our positions is bigger than it is.

        Companies when they extend credit are not creating MONEY in the fiat equivalent sense of the word. All they are doing is creating credit.

        When a bank (a real one not a shadow one) creates credit it is creating money.

      • Um no… private banks create private credit and not HPM… its denoted in the national currency, but is not afforded the same legal status e.g. private banks can go bankrupt, but not the sovereign.

        “I tend to think that a job guarantee will be less important if there is more money flowing in the parts of the economy where it should be flowing.”

        So were back to the private sector or free market is the best determinate of value because of the erroneous belief in free will or equilibrium and that everyone is an equal, contrary to all scientific evidence.

        “bankers Pseudo fiat.”

        Banks don’t have the lawful right to issue HPM, they have a charter to extend credit with a risk premium attached for which the bank is liable for fiduciary duty as part of their social l license, if that has been abused it a completely different scenario.

        “Despite Skippy’s enthusiasm for accusing everyone of being a monetarist”

        No what I said was the Chicago plain was monetarist and that Friedman was the ultimate monetarist, contra to some saying no and then having the facts put under their nose.

        “Companies when they extend credit are not creating MONEY in the fiat equivalent sense of the word. All they are doing is creating credit.”

        All money is debt… full stop… not all moneys are equal tho… when you have a tab at the bar you are creating credit which is denoted in Fiat to extinguish the claim.

        “A monetarist is an economist who holds the strong belief that the economy’s performance is determined almost entirely by changes in the money supply. Monetarists postulate that the economic health of an economy can be best controlled by changes on monetary supply, or money, by a governing body.”

        MMT does not hold to the belief in QTM e.g. that all humans obsessed about money is a store of anything and that all human interaction is a binary transaction based on barter. Its not supported by anthro, its a religious affiliation from our ignorant past.

        Disheveled Marsupial… I suggest you expand your knowlage base beyond the philosophical…

      • Skippy,

        HPM? High powered money?

        Please explain how terminology from the world of money multipliers and fraction reserve theory is of ANY relevance in a zero reserve system like that in Australia.

        You talk as though there are two types of money in Australia that are separate.

        There is no HPM.

      • I’m with pfffft there is no high powered money, but more to the point, there is no money crankery. I concede I could have been accused of such, in fairness in the past, but it’s a f (un)fairly derisive term when you cast about like that. Fraser does the thing and it does appear to be a penchant of the MMTers, you don’t even give us *cough* credit for putting aside our prejudices and investigating the literature and making up our mind about. Didn’t you read Gunnas whole pentameter treatise on chasing perfection just up above? You should

      • Base money is fundamentally different (and not because of legal reserve requirements assuming they exist).
        Say the RBA decided to shut up shop by promising to sell its bonds to drain the entire monetary base. Would this effect CBA’s ability to issue deposits at a 1 for 1 fixed exchange rate with base money? Unless it closes its branches and switches off the ATM’s probably.
        If CBA decided to do the same, sell securities to its depositors and extinguish its deposits. Would this effect the RBA’s ability to issue money? No.

      • Sweeper,

        I think it is best if we try to keep to terminology that is relevant to Australia and how the RBA actually operates.

        http://www.rba.gov.au/publications/bulletin/1999/mar/pdf/bu-0399-2.pdf

        What do you mean by Base Money. The closest equivalent in Australia are the balances of the Exchange Settlement accounts that banks and other organisation have at the RBA. These are as the name suggests, the primary way banks settle their debts centrally.

        For example.
        Bank A gives me a loan. I write a cheque drawing on the loan account and give it to Skippy who is a customer of Bank B. Bank B informs the RBA who credits Bank B’s ES account and debits Bank A’s ES Account. At the end of the day assuming there are no other transaction Bank A must settle their ES account and to do this it must borrow from Bank B. Bank B may not be keen to do so and is not obliged to.

        The RBA generally will not lend to Bank A to settle the account. What it tries to do is encourage Bank B to lend to Bank A at the target rate. This process of encouragement is assisted by open market operations whereby the RBA buys and sells bonds (though a lot of this action is now repo agreements which do have a strong whiff of lending about them).

        The point is that the ES Account balances of Bank A and Bank B are directly affected by their credit creation / bank lending activities. I get a loan and write a cheque to Skippy etc.

        I think calling the balances of those accounts Base Money or HPM just confuses the issue because it implies we are talking about some special type of money when in fact we are just talking about account balances in an exchange settlement system. Plus those terms are too closely associated with the concepts of money multipliers and fraction reserve banking etc.

        The important thing is the point you ultimately make.

        The RBA and the private banks are both capable of creating money that is legally indistinguishable.

        The make it in different ways but the result is the same.

        If the RBA did not create a brass razoo the banks could make it all and vice versa.

        My point is that the disadavantages of having banks create it in the form of their credit creation / lending activities – what I call Pseudo Fiat – are massive and result in the problems we are currently experiencing. Asset bubbles, deflation, rising inquality between asset owners (who are getting new money sprayed at their assets) and the asset less.

        Skippy, even though you might think he disagrees with me, actually agrees to a large extent because it is inherent in any proposal to increase the role of fiscal policy that the credit creation powers (money creation) of the private banks be limited. If both create money without control inflation will result sooner or later.

        Some MMT folk get excited and think any discussions of limiting credit creation amounts to monetarism but the monent someone calls them a bunch of public sector money printing maniacs they always quickly concede that inflation is a constraint. Once they admit that they are effectively a mild type of monetarist aka quantity theorist.

        If MMT got on board with the problems of banker Pseudo Fiat the public sector would have more room to move. That doesnt imply bigger government by the way.

        I say wind the banks powers to create money down to zero. Skippy says not quite that far.

        And because Skippy cannot seem to grasp this point I repeat it – credit extended by a bank creates money – credit extended by anyone else is just credit.

      • Using the legal and beauracratic terminology just confuses things. What matters are the concepts. That’s something that frustrates me with Mitchell. Who cares about the precise terminology, interbank settlements, floor rates etc. Glenn Stevens probably doesn’t know all that stuff. And he doesn’t need to either.
        If the RBA updates its jargon the old formal terminology is not applicable, but the concepts don’t change. They are the same across the world.
        By base money I mean currency + bank reserves (monetary liabilities of the CB)
        My disagreement is on your point that base and bank money are perfect substitutes. If the RBA stopped printing CBA could create it all.
        Bank money is only money because it’s a promise to pay the holder in base money. $100 deposit at CBA is only equivalent to $100 deposit at NAB because both promise to pay out $100 in currency.
        Following my previous example; what would happen if the RBA drained the entire monetary base? You say the banks would make up the difference. I say that bank money would pretty quickly cease being money. ATM’s would close, branches would close and banks wouldn’t be able to settle with one another (so payments between banks would cease)
        No one would accept cheques and deposits at par if they couldn’t be converted to base. ie bank money would cease being accepted as a means of payment or money.
        If the banks stopped creating money would this affect the RBA’s ability to do so? No. In theory the RBA could just bypass the banks (Friedmans helicopter money)
        Base money is high powered because it has special status. Only the CB can set the cost of holding money (interest rates) banks can’t. Only the CB can set the price of money (whether in terms of goods, gold or another currency) again banks can’t. Once it sets these prices it sets a limit on its own money creation. Bank money creation is pinned down by these limits.

      • Sorry Sweeper but your argument has a paradox, you say that the banks promise to pay $100 of RBA money not theirs, but the liabilities of the banks via loans are far excess of RBA issue. So it can’t be as clear cut as you say because there arwn

      • Sweeper,

        The reason I suggested using the actual terminology is because if you don’t it is very easy to get confused.

        When Bank A enters a loan contract it is effectively creating an IOU which the borrower is permitted to transfer to someone else in receipt for goods or services (say buying a house). That someone else can then present that IOU to their bank (Bank B) who can then claim on the IOU from Bank A.

        This claim by Bank B on Bank A is managed by the RBA via the ES accounts of both banks. All the RBA is doing is keeping a tally of the Bank A IOUs that Bank B has a claim on.

        What if Bank B wants to fill a bath tub with cash using Bank A’s IOUs? By that I mean what if Bank B wants to convert the Bank A IOU to cash?

        It doesn’t need to go to Bank A.

        It simply buys the Bank Notes from the RBA using the credit in its ES account. The RBA debits Bank B’s ES account and then sends a truck over full of crispy fresh notes. There is a corresponding credit entry in some other RBA account to reflect the sale of the notes.

        Now Bank B’s ES account does not simply record its IOU relationship with other banks. It also represents its purchase and sales of government securities.

        When it buys bonds from the AOFM it pays for them using its ES account. When it buys some bonds Bank B’s ES account is debited and AOFM’s account (treasury) is credited.

        But because all that bond buying by banks is a heavy drain on the ES accounts and is likely to put upward pressure on the overnight rate (pushing it above the target rate) the RBA steps in a buys some bonds from the banks and deposits the proceeds into their ES accounts. In a sense the RBA refills the ES accounts by buying bonds at the same time the banks are buying bonds.

        In other words if the RBA wants to maintain its target rate – it is usually forced to buy some bonds from the banks when they buy new issues from the AOFM – in other words it is usually printing money when the AOFM sells bonds to ‘finance’ a deficit.

        There is nothing stopping Bank B from using some of the ES balance resulting from the RBA buying government bonds from Bank B to buy currency to fill that bathtub full of fresh crispy notes.

        This is why the legal recognition of the credit created by Authorised Deposit taking institutions is so important and why it literally is a licence to create money that is in all practical senses indistinguishable from money created by the RBA when it buys government securities.

        Keep in mind that all fiat money is just credit and only exists as accounting entries (except when it ALSO takes physical form as currency).

        A licence to print money sounds amazing and it is. That is why APRA and the RBA are supposed to be watching the ADIs so closely and controlling how much money they create – with Basel etc. The reason that many people are giving APRA and RBA a hard time is because there are concerns that they are not doing a good job and should be exercising more prudential management of the banks credit creation powers.

        My view is that the banks should not be allowed to create credit that is given the status of public fiat.

        My point actually quite simple.

        There is no good reason to give the protection of the state to the credit created by banks.

        As far as the public money supply is concerned – the RBA is quite capable of supplying all that is required for a growing economy without inflation and deflation. The fairest way of doing so is by running a fiscal deficit with the government deciding how the deficit is to be achieved by a mix of spending and taxing.

        Private Banks would still be important but only as traders in the credit created by the RBA. In other words purely as intermediaries between savers and borrowers. This is an important function so don’t get the idea that I reckon the government should be making the decision on how savings are allocated to borrowers. If a banks does a bad job of picking borrowers it loses money and could go broke.

        If savers don’t want to risk their savings they simply accept that they will get no interest. As the money is not lent out it is never at risk of being lost.

        Banks would be free to create credit like everyone else is free to create credit but it would not have the protection of the state and be treated as if it was issued by the state.

      • Exchange settlement accounts are just bank reserves. Can we just call them bank reserves? ie central bank money provided to banks to settle interbank payments. They could just use currency for settlement btw. And once upon a time did.
        I don’t get how your story about bank A and B and foray into the world of exchange settlement accounts somehow suggests that base and bank money are perfect substitutes and base money isn’t high powered. The fact that banks settle their interbank payments in the CB’s money not their own should be prima facie evidence that base money is different. Banks promise to settle all their obligations including “money” in the CB’s money. The CB by contrast doesn’t promise to settle its obligations in someone else’s money, it’s liabilities are denominated in their own liabilities. That’s the key difference. That’s why banks hold currency and bank reserves. Even if there is no legal reserve requirement, there is still a qty in currency and reserves that banks want to hold at the target rate (desired reserves) which is driven by their level of deposits. A deposit creation strategy would increase desired reserves. Yes (to your point on reserves and the target rate) the CB can provide them via loans or open market purchases to maintain a target rate. However the decision to set a target rate is also ultimately a decision on qty (both reserves and deposits). Targeting a lower rate and allowing the monetary base to increase to achieve it, and targeting a larger base and allowing the interest rate to fall are equivalent in that they both get to the same place. Same as the way a tariff and quota get the same result. In other words the CB effectively limits bank money creation when it sets its target rate. Banks have no control over base money creation.

      • Also it’s not a licence to print money. Printing money is called counterfeiting. And it’s illegal because it’s effectively stealing from the taxpayer.
        If I “print” money I create net wealth for myself at the expense of the taxpayer. If a bank issues a deposit it doesn’t create net wealth for itself, it’s just a promise to pay the CB’s money on demand. And for that reason it’s accepted as means of exchange “money”

      • So why eve have commercial banks? Why not just have them all be RBA branches? That would at least be logically consistent. Sorry Sweeper the rip in your circular argument is strong.. Seriously why bother with the volatility commercial banks induce if they are just pretending to be the RBA? Why shouldn’t RBA take deposits at ES from everyone?

      • Sweeper,

        We could call them reserves but as I keep saying that terminology is just confusing when we are talking about a tally of interbank obligations of their lending IOUs. ‘Reserves’ suggests they are reserves of something they have obtained when they are in part what they and their fellow banks have created. Reserves suggests old commodity money concepts and fractional reserve banking.

        My concern about calling them reserves is heightened by your insistence that that bank money is different to base money.

        How do you tell them apart when they are both in the same ES account? Do they smell different?

        The fact that banks IOUs are expressed in $AUD does not change the fact they are actually created by the banks.

        That Central Bank can create $AUD without limit but just because the banks ability to create can be limited does not make what each creates different.

        You keep explaining how banks and the RBA different but you have not explained why the money created by each is different.

        As I noted above money created by the RBA is not handled separately in the ES accounts to the money created by banks.

        If you accept that point you will find the Oz monetary model much easier to understand and possibly also share my concerns that bank money is mixed with publicly created money (RBA money) and very few people even understand that it is happening.

        When the RBA sets the target rate they do not get to control money supply – it indirectly influences the demand for credit creation but that is all. Banks are not forced to create loans and borrowers are not forced to borrow. As we know the decisions of bank lending officers may be profitable but they may not be productive.

        As a way of creating money having private banks do it via their lending decisions is a barbaric relic of the 19th century.

      • The exchange settlement accounts are only a liability of the RBA. Not of another bank.
        In terms of the target rate and the money supply and bank lending:
        When I say the RBA controls the level of reserves and deposits through its target rate, I am not referring to bank lending. Eg. imagine a setup where deposit taking banks don’t lend anything. They just issue deposits and and buy securities and hold currency/reserves.
        How does the RBA control broad money in this situation? Simple. Through its target rate.
        If the RBA commits to a lower rate, holding cash becomes more attractive to securities. So the narrow banks try to sell their securities to get cash or borrow cash from the other narrow banks. But both of these force the target rate up.. unless the CB increases the base.
        Cutting rates and increasing the base are two descriptions of the same thing.
        For a given demand, cut the price of something, you increase qty demanded. If the monopoly supplier is committed to maintaining the target price it has to increase qty supplied.
        This has nothing to do with bank lending. I think you may be mixing together two fundamentally different functions: providing credit and providing money.
        Banks can provide money and simultaneously shrink credit (by issuing deposits and buying cash and securities), and they can increase credit and shrink money (by terming out their liability side). This happens all the time. In fact I’m guessing credit growth is usually strongest when money growth is anaemic (why hold money when there is a high rate of return available on credit). And money growth is strongest during a deleveraging (when interest rates and confidence are low) see Japan or the US post 08. Point is the RBA controls the base through its target rate which has a knock effect on deposits and *not* primarily through bank lending.

      • That’s all well and good Sweeper but if commercial banks only take deposits and don’t issue loans but buy cash and securities, where is money coming from to generate the deposits? And how eill

      • Mig,
        Separating credit and money provision makes a lot of sense. I don’t know why. Historical accident maybe.
        Why does CBA do life insurance and funds management?

      • Sweeper,

        What do you mean the ES accounts are a liability of the RBA? They are not a liability of the RBA.

        This paper by the RBA is a pretty good explanation of what they are and how they work. But keep in mind when reading these papers that the RBA does not spell out clearly what is really going on.

        For example:

        They do not explain that when they buy securities and credit the ES account of a bank they are quite literally just creating the money. Some people object to describing this as printing money but in effect that is what the accounting entries are doing. The RBA is creating money to acquire the securities. Likewise when they sell securities back to the banks they are removing money from the ES accounts.

        http://www.rba.gov.au/publications/bulletin/1999/mar/pdf/bu-0399-2.pdf

        This one is also good

        http://www.rba.gov.au/publications/bulletin/2003/jun/pdf/bu-0603-1.pdf

        Check out graph 1 in this paper as it shows how the ES account balances exploded during the GFC

        http://www.rba.gov.au/publications/bulletin/2010/dec/pdf/bu-1210-5.pdf

        The reason is that the banks did not want to lend to each other and the RBA had to really give them an incentive to do so.

        Sorry I am having difficulty in following the ES transactions implied in the example you are describing.

        How do you conclude that the growth of the money supply is weakest when credit growth is strongest if the act of a bank granting credit and thereby creating deposits creates money?

        When credit growth is strong and banks are making loans and their borrowers are writing cheques to customers of other banks that process results in large debits against that bank’s ES account and large credits against the ES accounts of the banks receiving the cheques.

        Whether the bank writing all the loans can attract sufficient offsetting transfers to balance its ES account is another matter. A reckless bank may find it very hard to borrow to settle its ES balance and you can be sure that the RBA is not going to step in and put taxpayer money at risk.

      • Fair enough Sweeper, I guess I just a clear explanation as to why things should be this labyrinthin and obscure. Not saying you should have that explanation but Mitchell could give it a shot

    • I largely agree with his conclusions, especially the pro fiscal thing.
      But I don’t get why he needs to go on an excursion into the world of bank reserves, money multipliers, banks in general actually, to arrive at his conclusions. It’s just a distraction.

    • The power of straight white men knows no bounds. The patriarchy has subordinated 1.3 billion Chinese into accepting white supremacy over the mainland Chinese ethnic minority.

    • Hehe, maaate, where’s your sense of humour?

      For the past two months on Line 15 subway in Beijing there has been a travel advert, it’s a cartoon promoting travel to Africa. A Chinese man is in a canibal cooking pot surrounded by savage African men. Hilarious!!! (actually I cringed and thought to myself I can’t believe they actually went there, man I’ve been here 15 years but I didn’t think they were that bad/insensitive/idiotic in the advertising agencies these days – I kind of avoid Chinese media most of the time, it’s one of my survival techniques).

      • TailorTrashMEMBER

        I see the humour in this ……we Australians are the racists when ever it is convenient to use it if we ever object to the quiet take over of our homes ……..but this ad says something as well….and the new generation of marketing people brought up adoring their electronic ” friends ” struggle with such concepts as sensitivity………….now give me Don Draper any day …..fuelled by a bottle of Canadian Club (BD or PRN ) ……………yeh ! ……the good old days when marketing men were mad indeed but still had sensitivity ……..

  11. “A new report by BMI Research forecasts the global mining project pipeline will continue to narrow in 2016 and 2017 as low metals and mineral prices force miners into further cost cuts and lower capital spending.

    However, a handful of countries are set to continue to make significant investment into both brownfield and greenfield projects, bolstered by a combination of low production costs, high-grade reserves and favourable regulations says BMI.

    None more so than Australia, where significant initial capex projects nearly outnumber the next ten countries on the list.”

    http://www.mining.com/no-one-comes-close-to-australias-mining-project-pipeline/

    What is it that the mining sector in Australia can see that the mining sectors in countries like the US, China, India and Russia cannot?

    Looks like we will have first mover advantage come the next mining boom …

    • Original John

      Maybe they know that automation in mining will reduce the cost out of Australia so we can deliver the lowest cost holes to the world. Bow down and worship the robot overlords and repent your organic lives to robot devil.

      • Original John, Bow Down to WASHINGTON! The Dawgs will win 10 this year and be ranked in the top 20. They have the best defense in the Pac 12 and one of the best quarterbacks in the country.

        GO HUSKIES!

  12. boomengineeringMEMBER

    I would like to see a debate here about the complete ownership of Australia in 1973 by America, removal of the words Commonwealth on bank notes etc.

    • So start one, pretty slim pickings so far, they’re not commonwealth notes they’re RBA notes

  13. Original John

    Complete with golden violin and the Robot Hell theme on eternal loop – fun for 20 minutes but murder for a week, torture for a month and hell for eternity!

  14. boomengineeringMEMBER

    Also which date between 1929 and 1934 Australia may have declared itself bankrupt owing money to the UN, IMF, The Crown, Rothschild central banks.

  15. boomengineeringMEMBER

    Miguel,
    That’s the whole point between 1901 and 1973 it was Commonweath, after its removal the common people were no longer able to benefit from the wealth created by the government

    • I don’t understand the distinction between such a expansive time period and a term wrt people getting a share of anything… history just does not support it…

      Australia’s beginning was purely as an off loading point for poor people which then just became a mercantile resource center for natural raw resources. WWII changed all that with the advent of American funds and influence, which was strengthened under the aegis of the cold war.

      Disheveled Marsupial… just putting up a date spread and the term commonwealth is sloppy and has zip accuracy to it… its all implied…

      • ErmingtonPlumbingMEMBER

        “Australia’s beginning was purely as an off loading point for poor people which then just became a mercantile resource center for natural raw resources.”

        Its a point which took some time to explain to my 8 year old daughter at bed time story time, a few nights back.
        She took some convincing that her English Convict, first fleet ansestor on her Mother’s side and her Irish
        Convict ansestor on my side, (transported here in 1816 for uttering unholy oaths) were not actually responsiable or involved in a millarty invasion of “Australia”.

        She found it very hard to believe that they were effectively sent here as Slaves and not some kind of evil Conquestadore here to pillage and Conquer for them selves.

        I don’t believe in veiwing Colonialism with rose coloured glasses, but nor do I agree with swing the pendulum all the way to opposite side of reverse racism as,..Reconciliation.

      • proofreadersMEMBER

        Too much time spent head down reading and practising what the “good” book says is probably quite counterproductive?

  16. ceteris paribus

    The biggest revelation of Friday’s Treasuers’ debate at the National Press Club was Scott Morrison’s admission that he intended, after the election, to revisit the 2014 savagery of welfare cuts on the working and underclasses, while he continues, like Horatio, to hold the bridge for the rest of us tax concession addicts- in the process of (rightly) edging back to budget balance.
    What is it that Morrison doesn’t understand? Many of these people are living minute to minute, not week to week. Is he really proposing starving these people and making them homeless, with no income maintenance for six months at a time?
    How have we acquired a Treasurer of the land saying such stupid and vulgar things? How do we, the lottery winners of the globe, allow him to say such vulgar things without response?

    • I see those attitudes as the leading edge of the ”Religious Right” very nasty and dangerous their belief system is faulty.

      I am not calling out all religions or believers just certain types,

      • ErmingtonPlumbingMEMBER

        Yes yes yes, some are friendlier than others in “this world”, but any true believer unapologetically accepts ones condemnation to hell for all ETERNITY!,…for Following the wrong Mastet,…for being in the wrong club.
        Disgusting thing to believe.

        https://youtu.be/Dy1Rgt4wc_Y

    • Original John

      “an increasingly oppressive political environment that sees a Western education as a threat”

      DO not under estimate this – from what I am seeing this trip – WOW…. In 3 years the changes (negative in this element) are massive….

      “Internet users have started calling those who have failed to find jobs on their return “haidai” – seaweed – according to Caixin, which also quoted employers complaining of an oversupply of foreign degrees. Whether overseas study is worth it, then, may come to depend on whether domestic or foreign degrees decline in value more rapidly.” – been saying this for years!!!

      • We agreed on this while ago – that Aus will not be seeing much revenue from Chinese students in few years time as China brings their university system up to the west’s standard. It appears we may lose this revenue stream even sooner than we thought.

      • Original John

        Problem is Nik, you know, I know it, Pop knows it, CB knows it, Virus knows it, but so many in this country are deluding themselves that services revenue to China will be our saviour. They don’t get that this can be shutdown overnight. The Iranian example in the article is very good, in ’89 when I was in the states at UW (as in Huskies a real football team at the time), we had a couple of Chinese students repatriated back home under unusual circumstances. Do not be deluded that this will not and can not happen again at anytime. Australia is not special, something that is being driven home in shovels and spades on this trip….

      • Can’t see it myself, Nikola – it runs very deep in their culture that the Professor is a kind of god and you do not question authority. They’d benefit from an Australian education just from a change in this viewpoint alone.

      • JohnR, you are very much wrong. Most professors in the top-ranked Chinese universities are mosttly/all western educated, and have spent considerable time working in a western country and/or with western academics/industry. Unless a chinese student goes to a tier-3 university in china, he will not experience “professor is god, dont question authority” type environment.

  17. If a stock goes to worthless it doesn’t mean all the others are, not so when banks do it with the public stamp

  18. boomengineeringMEMBER

    Hey original J,
    Sounds like WW 3 not far off, not the A bomb type just electronics and finance

    • Original John

      A lot of strange shit in the ether that is for sure. South China Seas stirring things up! and some interesting stuff in the official press here on US root of all evil.

      • Being seen to support Japan is not a good geopolitical strategy of China is important you your security or economy. The one China thing is gaining momentum too. But its really the natural extension of the currency wars that is morphing as we speak into trade barriers, bond markets and gold.

        It was always going to be a challenge for the US to share hegemony with another superpower.

  19. The Economist let the cat out of the bag in that article on debt. Growth in debt is an inequality story. Not a young v old, patient v impatient thing. If there was an equal distribution of income in all cohorts, household debt would be minimal (inter-household debt nets out) and the State would support widows and orphans. If you throw inequality into the mix with interest deductibility and bank deregulation you get an explosion in debt. Inequality is the dominant cause imo, not low interest rates or supposed deposit creation.

    • Sweeper read that too (I think) the damage caused by low and manipulated interest rates is just totally amazing. In short it has caused a world wide and era long ‘equity of debt’ swap. And incentivized by tax deduct-ability to boot.

      It may transpire that with a harsh reset on the cards that equity will be smashed and debt will be written off, that will be a very dangerous time IMO,

      • House an hour from Sydney on the coast sold $420 2015.

        Auction price guide $950k. 450 auction enquiries.

  20. CharlieChaplin

    I remember pre 2010 he was a champion against the existence of the bubble, using some dodgy family rather than individual income to price ratio that included superannuation. He had a few interviews as a talking head against Steve Keen which were a more than a little pompous. That was over 6 years ago now. Prices have remarkably continued to grow and yet he has totally changed camps. Interesting times.

    • CharlieChaplin

      Sorry talking about Chris Joye. Bloody phone won’t let me reply directly to comments about him above. Had to start new comment

      • haroldusMEMBER

        that’s sorta what I was talking about. I discovered MB through the late lamented Bubblepedia and CJoye was the devil incarnate. Now I listen to him and he seems reasonable in his opinions.

  21. haroldusMEMBER

    OK I’ll never vote Tory, so I guess he’s talking to the converted, but this was a pretty good line from Bum Slinky

    “One thing I’m sure about after July 2, is that the Liberal Party will go back to war with themselves, and I think they’d be better off doing it in opposition and really getting it out of their system, than doing it from government and wasting another three years of this nation’s life.”

    (http://www.smh.com.au/federal-politics/federal-election-2016/how-bill-shorten-went-from-faction-man-to-running-man-20160525-gp3wsx.html)

  22. haroldusMEMBER

    so I’m sure everyone has seen this now but the video is awesome. (http://www.dailymail.co.uk/news/article-3613826/Liberal-candidate-Chris-Jermyn-tries-gatecrash-Bill-Shorten-s-campaign-Sunbury-backfires.html)

    the thing I love is he says “I will be packing up our Listening Post rather than standing here in the rain and being interrogated by you”

    Leading to the question – what is his listening post???? I assume it is him listening? Or is it the grateful burghers of McEwen, come to listen to him.

    I hate flying, but I want to go to his Listening Post.

    Are there any MBers who can go and check it out?

    If only he had copies of the Grocery Code of Conduct to hand out at the Listening Post.

    Here’s his twitter (https://twitter.com/ChrisForMcEwen)

    Looking at his official Tory page he is somewhat evasive about his “qualifications”

    In addition to studies at the University of Melbourne and Curtin University of Technology, Chris is an Associate Fellow of the Australian Institute of Management and a Member of both the Australian Institute of Company Directors and the Financial Services Institute of Australasia.

    And wtf is the “Associate Fellow of the Australian Institute of Management”. I can’t find it on the website.

    I am assuming that Malcolm has written off this seat. But maybe he can get Chris a seat on the board of the Australian Submarine Corporation, to build us a few canoes.

    Edit: even better video!! (http://video.perthnow.com.au/v/464940/Chris-Jermyn-gatecrashes-Bill-Shorten-event)

  23. MMT does not hold to the money multiplier effect in macroeconomics, its flows remember and whilst were at it where did the hyperinflation go wrt 29T issued that QTM predicted.

    Look I just don’t understand the myopia on interest when we have decades of historical events, which explain what has happened, but some want to pin the blame on interest. Credit Cards companies over a decade ago for example, lowering the underwriting by 2% just to suck in new blood and then hit them with fee padding in removing debt cycle.

    ““Secret History of the Credit Card” traces the phenomenal rise of credit cards – 640 million are circulating in the US – since one small American state decided to deregulate its fledgling credit industry more than two decades ago.”

    http://www.abc.net.au/4corners/content/2005/s1310444.htm

    Seems deregulation was the agency which proceeded events and not interest. This methodology can be seen in a wide array of events stretching out from the mid 70s when productivity and wages diverged.

    Disheveled Marsupial…. seems predatory and control fraud behavior had a much more significant role in events, yet, some are still claiming that it was all due to dramas with the monetary system e.g. trying to make money honest and not the ethical behavior of those issuing credit.

    • Because interest is what is captured after the initially contracted loan is retired. History most certainly shows that when interest is introduced there quickly arises a usury class who constantly, at compounding rate, capture the lions share of the wealth/productivity generated in an economy where usury is the name of the game.

      Let me ask you this, and Fraser doesn’t provide any answer to it, if money is debt and debt is money, interest can’t be a debt because it was never extended, so it simultaneously can’t be money either. So what is interest? It’s fraud.

      • GunnamattaMEMBER

        , if money is debt and debt is money, interest can’t be a debt because it was never extended, so it simultaneously can’t be money either. So what is interest?

        Good Question. Your standard textbook answer runs something along the lines of ‘Interest is the return for the risk carried by the lender for funding the the activity undertaken by the borrower’.

        But the question which arises is what is the return to society where the risk is that the money creation process and the use of debt as money is a process which delivers an unaccounted for but majority benefit to a few and a comprehensively accounted for minority benefit to the rest? and what are the risks (and rewards for whom) in not identifying the nature of the risk and establishing an overt risk/reward framework which applies across the lending (and hence money creation) spectrum?

      • Not all debt is money. And base money isn’t really debt imo (bank money is). The government reports it as debt to keep the accountants at the CB happy. But how can a zero coupon perpetual instrument which can’t be redeemed be a debt? It’s not, in reality.
        In terms of interest. Interest is debt. Or interest + principal is the value of debt extended in future value terms. So it is extended in that sense.

      • Mig interest is a risk premium and not usury [religious term], now if you want to discuss how its been abused one only has to look at the econ schools which foamed the runway for it e.g. economic libertarian.

        Saying interest is fraud is a tautology, again even in antiquity certain religious groups only forbid interest to fellow believers and countermen, everyone else was fair game.

        Disheveled Marsupial…. it would benefit your camps augment if it could expand beyond interest and be inclusive of historical events. I say again Friedman is not to be trusted by being a mouth organ for land bankers and developers, him and his camp worked for the so called elites.

      • I completely disagree that the interest was effectively extended Sweeper and I’ll tell you why, because I can only get use of the credit at today’s value not tomorrow’s. If use that money to meet payroll today and next year labour is cheaper, you’re still paying interest on yesterdays value not todays, this is true no matter what you use it for with a singular exception, carry trade…

      • interested party

        “Interest is a risk premium”

        The only risk to lenders is the risk of an opportunity loss…. to not collect on the interest spoils as Mig correctly states as fraud. All else is noise.

      • We would not even be having this conversation if it was not for the economic libertarians BS about wage inflation, which supported cramming down wages for decades and on the other supporting all deregulation as rational agent models informed. So banks and other lenders and sundry went on a binge session, true to form, every time they blow themselves up they cry for a safe place to store their personal wealth.

        Interest is fraud, taxes are theft, government is force by gun, markets are all knowing et al…. all predicated on the assumption of the individual as an axiom aka faith based…

        Disheveled Marsupial… some might have dramas understanding the chances of 100% reserve is less that zero… so maybe energy would be better directed at more realistic and important issues like actual control fraud, corruption or tax dodging…

      • “So in the 1980s banks found a new market: corporate raiders treated companies much like real estate, to be bought on credit and managed to create a capital gain. The rise in interest rates to 20 percent by 1980 forced most states to revoke their usury laws, and credit card companies played states against each other in a race to the bottom when it came to protecting consumer rights. So the high-interest junk bond was born, largely at the hands of Michael Milken’s gang at Drexel Burnham.

        American industry began to be financialized (and in the process, criminalized). But running a company to make a financial gain is different from running an industrial firm to expand production. Cash flow that was not paid to bankers and bondholders for the credit to buy out stock holders was used for purposes other than direct capital investment – above all for stock buybacks to support their price, and for mergers and acquisitions to acquire yet more companies.

        The aim was not to increase production but to increase balance-sheet wealth – while extracting revenue from companies much like landlords bleeding a building. That is the time frame of finance capital, in contrast to industrial capital. It is short-term, not long term. This is why it is extractive rather than productive. The revenue has no counterpart in new direct investment in output, but rather in overhead debt extracting a rising flow of interest from the economy.

        “Wealth creation” by debt leveraging – that is, asset-price inflation – was celebrated as a post-industrial economy, as if this were a positive and natural evolution. But in reality it is a lapse back into a rentier economy, and even into a kind of neofeudalism. The post-2008 bailouts have vested a new rentier elite to lord it over the 21st century, thanks to the fact that most gains since 1980 have gone to the 1% – mainly the financial sector, not to the 99%.

        In the end this shrinks the economy – and that means that more and more loans will go bad, until crisis levels are reached at the point where lenders realize that there is no more room to extract more, and stop lending. But in the absence of government budget deficits, bank lending is the only support for demand – so the financial rug is pulled out from under the economy. That is the point at which banks demand bailouts – giving them the money, rather than giving the economy the revenue to spend and pull itself out of depression. So government debt is increased by giveaways to the banks, not by spending into the “real” economy.

        Economics textbooks teach supply and demand curves. Every marginal increase in supply lowers the price of what is being supplied. For the job market this means that the higher the unemployment rate, the lower wages will fall. Conversely, the more workers you hire, the more you have to pay to attract workers. Government officials and bankers are indoctrinated in these textbooks and conclude that the less employment there is, the more wages will fall – thereby presumably leaving a wider profit margin, assuming that the goods can still be sold at a steady price. So employers seek to earn more by keeping employment low enough to prevent wages from rising. This maximizes the power of wealth over labor.

        Economists conclude that to make economies more competitive, they need to keep wages low so as to undersell other countries. So a race to the bottom develops. But what seems to help countries compete actually hurts their domestic market.” – snip

        http://neweconomicperspectives.org/2012/04/productivity-the-miracle-of-compound-interest-and-poverty.html

        Disheveled Marsupial… navel gazing is not a concise examination of anything where as forensic history tell another story all together and is demonstrable…

      • Per usual when anyone starts talking about factual events and how they flesh out how we got here… plus define the agency behind it all…. the ideologues wander off…

      • Paranoid much? I was off reading your link… Which, call me crazy, seems to suggest that financialisation happens when you break down usury regulations and compete for bond issues and yield curves…

      • interested party

        Skippy,
        Factual events are history. How we got here is hardly relevant to where we are headed.
        The same rules will not apply as we have a bigger player on the field now and she’s pissed.
        Your “elite” have no answer to the predicaments we face, and neither do you or I… so the playing field is level.

        The biosphere has been put through the factory and all that is left is a pile of paper wealth that will prove to be absolutely useless in time.

        As I said up-thread… all else is noise.

      • Mig…

        We don’t even need to be issuing bonds, hangover from the old system as a freebie to the elites – see Hudson et al.

        IP…

        If you can’t identify the problems good luck on formulating a solution i.e. 100% reserve.

        Disheveled Marsupial… some like to fly blind and seek direction in poetry or sophist rhetoric… Darwin award stuff…

      • interested party

        Skippy,
        I get what you have to offer, but it’s relevance to the future is tenuous.
        As to identifying problems… they are not financial…there’s a hint.

        As to your formulating a solution, you won’t find me calling for 100%…50%…any %…care factor O.

        Are you telling me you believe there is a financial solution to our predicament….. based on past history? If so, sorry but I won’t subscribe.

      • IP…

        I never said anything about a financial solution, although there is a monetary and fiscal solution tho its not politically available at the moment. Sanders and his advisors are currently trying to change that, even if Sanders looses, the shifting of the Dem party back to a more traditional norm platform is still occurring, setting things up for 2020.

        Migs and 007 solution is to go back in time…

        http://neweconomicperspectives.org/2016/02/guest-post-positive-money-action.html

        LRWray | February 6, 2016 at 8:41 pm |

        “Some seem to have missed the point of the essay, which carries the proposal of Positive Money to its logical conclusions.

        Please see: A Modest Proposal For Preventing The Children of Poor People in Ireland From Being A burden to Their Parents or Country, and For Making Them Beneficial to The Publick
        By Jonathan Swift (1729)”

        I’m in this camp…

        The Fundamentals

        Sovereign money stimulates the economy by increasing the price of and therefore reduce the level of bank lending and then replaces that in the economy by increased government spending or tax cuts. Essentially the government does the borrowing from its own bank so you don’t have to.

        And that’s it.

        We can do that with the current arrangements. We already do of course, but we can do it more if we choose to.

        The basic theory is that increasing the price of bank lending automatically selects the correct projects to receive bank lending. Unfortunately what it is likely to do is encourage ponzi schemes since those are the ones with the returns necessary to pay the higher price.

        The correct approach, as highlighted by the MMT view, is to reduce bank lending by banning its use for anything that isn’t constructive. Bill Mitchell regularly suggests that 97% of financial transactions should be illegal. You should narrow banks directly by taking action rather than indirectly by ‘influence’. Then you can leave the price of loans low – allowing those projects with a low marginal efficiency of capital to receive funding. In a world with ever decreasing returns on useful projects that is important.

        The Tricks

        Beyond that there is a lot of bamboozling going on.

        Let’s start with the “stopping banks creating money” myth.

        Here’s a model of the current UK bank structure.

        When a bank makes a loan, and the payments made with it, savings have a tendency to drift to National Savings (because they pay an interest rate and are 100% secure – since it is part of government). That drains the cash buffer of the bank. So you would get this.

        A bank can’t continue to operate like that as it would quickly run out of cash. So all banks have a Treasury department who have the job of maintaining the buffers and ratios of the bank at the required levels. So they compete with National Savings to attract back the deposit (or more likely prevent it leaving in the first place) by paying the required interest rate. This, plus the running costs of the other liabilities on the balance sheet, determines the bank’s funding costs which in turn determines the price of the loans the bank makes.

        And that dynamic feedback process across assets and liabilities maintains the usual static image of a loan creating a deposit and the bank balance sheet expanding:

        Essentially modern commercial banks are always ‘fully funded’. They have to be to counteract the persistent drains towards National Savings and into Gilts.

        The plain money version of the Sovereign Money system simply changes the focus of your attention to National Savings. The difference is that rather than holding the Banks reserves directly on the balance sheet of the central bank (in the banking department), they are held in the equivalent of National Savings (a new transaction department). Effectively National Savings moves from HM Treasury to the Bank of England and starts doing white box current accounts. You haven’t changed anything here. Just moved things between balance sheets.

        http://www.3spoken.co.uk/2014/11/the-sovereign-money-illusion.html

        Disheveled Marsupial…. beware of people offering simple solutions which seemingly sound common sense based, most of this stuff is actually counter intuitive and peoples environmental biases struggle with the terrain…. especially people that work in finance or believe in hard currency magic powers…

      • interested party

        Skippy,
        From my perspective, 007/Mig/Skippy are arguing over the colour of the lipstick on the pig. No matter which way you colour it, those with access to the levers will distort the system ( makes no difference what system ) to the favour of themselves and their kind. That is why I consider arguing about it… noise.
        We can talk around this issue till the cows come home, but human nature in this day and age is based around greed and never having enough…. mainly because what they already have does not make them happy or fulfil them. Meanwhile, the issues of the health of the planet fall to last place on the level of importance. That is my gripe. Yes, I probably hijacked your discussion on the financial side of things but you need to understand that what you are supporting is likely just more of the same thing in a different costume.

        Money does the weirdest things to people… and banks are run by people.

      • IP…

        That mainstream economics has “Human Nature” so wrong is a big part of our problems, so much so one wonders how or why. Other than that the dramas seem to revolve around why so many are in so much debt and how to rectify that. The other bit is how to de-financialize the economy away from banks and corporations engaging in unproductive activity – let alone pure looting.

        Disheveled Marsupial… this is where I get a bit jack with mig – 007 and others… mig once referenced the Slone school in defense during an argument, Slone being a well know Corporatist neoliberal grooming camp which loves unproductive financial gain / looting…. geez just look at Carly Fiorina… old William “Bill” Redington Hewlett and David “Dave” Packard would be ashamed at what she has done… they never screwed down suppliers or wages… they have to eat and live in order to help your company grow…

      • interested party

        Last note from me, skip

        I think that this monetary system needs to go full term, and whatever is borne out of that be dealt with in a humanitarian way. The lessons of greed need to be etched into peoples consciousness….. and those lessons will be so much better illuminated by the lights of the burning bridge.

        Gone all this week…. doing a job in the middle of the Daintree …… could be worse places to be.
        You enjoy the big smoke, dude.

        edit to add…oh, and on the human nature bit…

        My thoughts are that humans have not evolved fast enough to have the intellectual maturity to manage the evolutions in technology over the same time period. We play catch-up and that has caused us to lose our connections with the natural world which has become an abstraction now for most, and the emptiness that people feel from that is filled with technology and financial accumulation. These people remain hollow. That is modern society.

        Treating the biosphere in this way has taken us to the edge, and still we look to technology and finance for salvation.

      • Skippy,

        Sloan school? That is a pretty low blow ! lol.

        IP is quite right we are much more in agreement than disagreement, even though the puritanical ideological trade markers of the MMT school are quite intolerant of their chartalist kissing cousins. Those of us more chartalist than MMT are quite forgiving of our noisy relatives.

        Though I disagree with IP that reformng the monetary system would not be a major acheivement. It may not cure reality TV and the common cold but it would be a big improvement. Interest bearing credit as money is a massive driver of the growth obsession as it is the result of the chase for compounding interest.

        Plus the road to my promised land travels much the same track as Skippy’s.

        Once Skippy has chained down the bank lending with Bill Mitchell to 3 % of the current lending activities and fiscal policy is filling the void along with productive lending of all those deficit created deposits there will be very little credit creation by private banks anyway.

        Chances are at some point along the way someone will realise (possibly even Skip) that credit creation with an interest trailing commission as fiat by private banks is a barbaric and redundant relic and they will climb in their de loren and return to this thread and concede the point.

      • interested party

        007, just a quick one…

        My thoughts are similar to you in that yes, reformation would be most welcome but futile over time as people-money-power is a toxic mix… and the realist in me can see that society has so much embedded capital in the current model that it will require a train wreck to enable change anyway…. so……. that should clarify my stance on it ( the ongoing conversation here ) being just ‘noise’.

        got to go…

      • 007…

        You can keep using your canned talking points, which conclusions are solely premised on ex nihilo axioms and not operational reality’s or evidence based methodology all you like. Had you read any of the links and the conclusions they arrived at and how they are arrived at them. you would understand the neoliberal aspect of your camps theory. Not only that but the AET neoclassical approach used to construct it, I would have thought the Friedman name and its neoliberal affiliation would have dawn on you by now or are you aware of this fact and only attempt to repackage it for better social PR.

        ” The Sovereign Money Illusion

        “Because a good magician can do something shouldn’t make you right away jump to the conclusion that it’s a real phenomenon.” —Richard Feynman

        I’ve always been fond of magic. I love the stuff Derren Brown does particularly where he demonstrates the same ‘powers’ as so-called psychics. Professor Richard Wiseman, originally a professional magician, has some excellent You Tube videos on the science of persuasion. And of course I’ve been a fan of James Randi for many years now – arch skeptic and debunker of myths everywhere. Those in the UK should take the opportunity to watch his biopic. Everyone else should read the NY Times article. It’s very enlightening.

        One of the key points that comes out of all this is that humans have a tendency to be easily fooled and they love simplistic solutions – particularly if it is mixed up with a lot of fancy sounding hocus pocus. There are whole sets of channels on TV designed solely to part you from your money with the most amazing claims about all sorts of things – from jewellery to jesus.

        As Randi himself points out, and discovered with his work to expose Uri Geller, the more you highlight and debunk nonsense, the more popular it tends to become. And that’s the main reason I’ve largely stayed away from the Sovereign Money debate.

        Marketing and PR clearly work. People who are good at talking and writing can hoodwink pretty much anybody if they choose to. They may even believe it themselves – who knows. You can’t really ascertain that from watching them.

        What I can do though is show you how the illusion is done. Because it is just an illusion. Nothing fundamental changes, but a few unpleasant things are cleverly hidden that are worth highlighting.”

        http://www.3spoken.co.uk/2014/11/the-sovereign-money-illusion.html

        Its as bad as the whole debunking of Says Law where proponents in the end were left with saying, “but – WE – still need it… obviously academic rigor just fly’s out the window for some…

        Disheveled Marsupial…. do avail yourself of the link and discussion on neoliberalism at the bottom of this page as it will help you contextualize how economic and monetary system theory’s and operations have been theorized but how they have been utilized. This is why some are obsessed about banks but completely leave out everything else, corporations, shadow sector, et al when the Chicago plan was devised in a completely different time and place.

  24. As if something out of bad dream, the economy continues to shrink. Actually, the economy has been shrunken this whole time, it is only the full recovery narrative that has shriveled as each drastic data revision blasts apart what little is left of the positivity…..Every five years, the (US) Census Bureau conducts a full-scale Economic Census….Because of its exhaustive size and scope, it takes years before the data can be incorporated into each of these economic accounts. … it really didn’t start to reveal the rampant over-estimation until last year.
    That means that until these past few years, the stochastic estimations of monthly variance were based upon the 2007 Economic Census, with pre-crisis conditions as the most basic assumption of how the data “should” behave.

    http://www.alhambrapartners.com/2016/05/26/even-more-recovery-was-erased/

    • St JacquesMEMBER

      Good article:.
      “That means that the recovery didn’t disappear, it was never there to begin with, rather it is the narrative that has or at least a great deal of data formerly supporting it (however loosely). Since this is mostly related to consumer spending and really lack of income (but not limited to it, since capital goods are included in these revisions) it casts even more suspicion on whatever stochastic regressions exist within the payroll figures that have so far somehow resisted any benchmark revisions at all. Instead, durable goods with this current benchmark adds further weight to the common sense proposition that there is something very wrong in an economy that “loses” 14 or 15 million people from the labor force.”
      >And all this comes at the end of forty years of income stagnation. They don’t believe anyone, the stories of opening up to trade and immigration have brought nothing but increasing pressure on incomes, and personal insecurity so naturally they’re latching onto people who can provide an outlet for their disbelief and anger.

    • How can world economy grow in an environment of massive overcapacity coupled with even more massive debt. Not to mention the effects that automation and robotics..
      The only question is for how long can the central banks, IMF and rest of the “elite” be able to full everyone around. I will not be surprised if we see pitchforks/uprisings around the world within 5 years from here. And that would be best scenario for all of us – “peaceful” system change. Further down there is a darker option.
      All that post 2008 “recovery” is based on massive debt to build overcapacity that now needs to be shut (steel mills, glass mills, car plants etc..). Who will be winner and loser is something I can’t tell right now but China may be at the receiving end if US and EU continue to impose more tariffs on Chinese products. And Aus as collateral damage since China will not need our dirt any longer or at least will need lot less than they need right now.
      Truly interesting times we witness. Even WW3 is not out of question – one way to reset the system – that will get the economy growing. I mean look at South China Sea and how US promotes “regional stability” in Europe by performing military drills right along Russia border. Will not need much to set it on fire.

  25. “reported back that intimate cosy bars were the coming thing and booze barns were dying. If the government hadn’t changed and we hadn’t deregulated everything I would probably have been a mile off. But Rogernomics happened and inside a decade I was right on the money.

    Nobody goes to a booze barn of 2000 people and buys beer in plastic jugs and has a scrap in the car park in their best flares any more. They preload and hit the fancy bars with $20 craft beers and have a scrap outside McDonald’s after the bars have chucked them out. We’ve come so far.”

    http://i.stuff.co.nz/national/politics/opinion/80459663/david-slack-promise-you-the-bluest-summer-sky.html

  26. House an hour from Sydney on the coast sold $420 2015.

    Auction price guide $950k. 450 auction enquiries.

    • I am not questioning your integrity here but do you have a link from realestate.com about the actual property. I am just curious to see the the place. I was told at work about two examples where developers accepted or offered 20% discounts on off the plan apartments and I really want to see some firm evidence that this is starting to happen.

      • Zeno of Citium

        Gold Coast penthouse off the plan $17 Million – buyers bank valued it and said they would not stump up the cash. Was only able to sell it for $7 Million. Buyer defaulted on his deposit – developer took him to court – he lost and had to pay the remainder – plus some.

        Yup.

        Same article – banks are valuing many properties (40%+?) at HALF what off the plan buyers have committed to – shit is getting so real.

  27. GunnamattaMEMBER

    For Todays look at the contemporary press in action we head off to the booming world of Domain…….

    http://www.domain.com.au/news/busted-six-myths-about-chinese-property-buyers-20160527-goi2jv/

    Busted: Six myths about Chinese property buyers
    May 29, 2016
    Christina Zhou
    Domain Reporter

    Worth noting that Fairfax have in recent weeks shed Michael West and Malcolm Maiden from their ranks, so you would assume that the talent they are keeping on is pretty good. This piece is worth considering in terms of where Fairfax sees itself, what type of ‘journalism’ it sees worthy of pushing, and of the ‘skill sets’ – which Michael West was told he didn’t have – required

    Chinese buyers have taken centre stage on Australia’s property scene following an exponential surge in real estate investment from offshore markets.

    China is by far the biggest foreign buyer of residential and commercial property, proposing $24.3 billion of spend in 2014-15 – more than triple the United States and six times the outlay from Singapore, the Foreign Investment Review Board annual reports shows.

    This is a giant leap, considering the value of China’s proposed investment was behind the United States and Singapore in 2011-12 – at just $4.2 billion. Some experts tip India will be the next major player in Australian real estate.

    So far, a factual start. Fits with the headline, and runs over the sudden magnitude of the Chinese buyer in our midst. For anyone wondering why there is a sudden reference to India in the final sentence of the opening stanza, that is the dog whistle. It is there to appeal to that part of the readership which will assume that the China buyer issue cannot be changed and that their focus should be on dealing with the rising issue – ie ‘go and head off those Indian buyers’

    Property experts say some Australians priced out of the market after years of prices growth are using overseas-based Chinese buyers as scapegoats responsible for housing unaffordability.

    The media overemphasis on “Chinese” buyers over other ethnic groups such as Indian, French or Canadian has fuelled public concern over whether these buyers are inching the Australian dream further out of reach.

    The generalisation of the term Chinese buyers, to include anyone of Asian appearance or with an Asian surname, has placed local and international buyers in the same basket, and exaggerated the extent of Chinese interest.

    Property experts reveal some of the biggest misconceptions:

    Now we are getting into the swing of things! First up we have reference to ‘Property experts, and a casual look through the piece reveals we have three who are Investorist chief executive Jon Ellis, Esther Yong, director at Chinese portal ACProperty, and Biggin and Scott Glen Waverley director Ming Xu.

    Now Ms Zhou may care to get someone explain to her that these three ‘experts’ are also in fact ‘vested interests’ insofar as all three are reliant on Chinese buyers turning up in Australia and buying lots of real estate. Using them in this piece would be in broadly the same league as writing a piece about China building military installations in the South China Sea and getting three experts from the Peoples Liberation Army (and maybe one from the CEO of their logistics supplier) about why that would be a good thing. They may be experts in the party line, but they may not be experts in considering all the issues relating to a specific question. This would accord with identifiable characteristics of Chinese media outlets which – unlike many Western media outlets which at least try to appear reflective of a journalistic tradition involving being considered, being diverse in sourcing facts and narrative points, and relating questions to the experiences of the readers or viewers – are primarily concerned with exhorting the views of the leadership around a narrative generally crafted by party ideologues, and crowding out competing interpretations or explanations from the view of the readership or viewership.

    The interesting phenomena for the ambient reader is that there appears to be little by way of editorial capability at Fairfax which can twig to this. Also adding to the perception of little by way of editorial perusal of the piece is the regrettable ‘priced out of the market after years of prices growth’ which sees a duplicated use of ‘price’ and a grammatically incorrect form second time around.

    That brings us to ‘are using overseas-based Chinese buyers as scapegoats’. Now the ambient reader will already have noted that Ms Zhou herself has already identified that there has been a massive increase in Chinese buyer numbers and the volumes they have purchased. This bring us to wonder if she thinks it unreasonable for ordinary Australian resident (and tax paying) buyers of Australian real estate to observe the same phenomena and consider it unrelated to the equally obvious sharp rise in prices for Australian real estate. Does that mean they are using Chinese buyers as ‘scapegoats’? Or is it possible that they may identify the Chinese buyer as a factor in the rising price phenomena she has identified – possibly along with other phenomena regularly identified at MacroBusiness, including local speculators, local taxation settings, landbanking, the local media and its reliance on real estate advertising [particularly Fairfax of which Ms Zhou is a part] – and ask questions about whether the rise in Australian real estate prices is a good thing, whether it fits within an economic narrative which is viable, whether there are questions to be asked about the causative factors, and (yes) whether Chinese buyers are a part of the dynamic which has caused the price rises and needs to be addressed if there is a case to be made that real estate prices have ceased to be sustainable in an economic narrative sense.

    Next up comes ‘The generalisation of the term Chinese buyers, to include anyone of Asian appearance or with an Asian surname, has placed local and international buyers in the same basket, and exaggerated the extent of Chinese interest.’ Here we note the use ‘in the same basket’ (which is unfair to local ethnic Chinese buyers) and the use of the word ‘exaggerated’ (which adds to the tone of an error in the observation of Chinese buyers, rather than, for example, ‘magnified’). She also seemingly ignores the issue that there is no requirement for any buyer to prove their nationality bona fides in Australian real estate transactions, and that the extent to which foreign Chinese buyers could easily be distinguished from local ethnic Chinese buyers if there was.

    Of course there is an element of the ridiculous added to spice things up with reference to French and Canadian buyers – has anyone ever seen or heard of a place being sold to a French or Canadian buyer?

    1. Overseas Chinese investors are pricing Australian first home buyers out of the market

    Offshore Chinese investors and first home buyers generally don’t compete for the same properties.
    In Melbourne, Chinese investors are mostly interested in new CBD apartments and suburbs with a strong Chinese community, such as Box Hill and Glen Waverley.

    Most buyers of existing dwellings are migrants – or Australian Chinese. Offshore buyers have been snapping up new multimillion-dollar houses until FIRB rules were clarified at the end of last year.
    It’s true first home buyers targeting some pockets will face competition. But young buyers are more likely to prefer established apartments, townhouses and semi-detached houses in inner-city pockets such as Prahran, Brunswick, St Kilda and Richmond.

    Offshore buyers can buy new apartments or townhouses with FIRB approval, but those with specific temporary visas can buy one established property to live in, provided they sell it when it’s no longer their residence.

    Investorist chief executive Jon Ellis says many Chinese investors are purchasing off-the-plan apartments in the CBD, while first-timers are buying established apartments in suburbs like Caulfield.

    Based on their sales data, more than 70 per cent of all new apartment buyers are investors.

    Mr Ellis says Chinese buyers are helping first home buyers because they’re increasing supply, and also stimulating construction activity which is keeping the economy afloat.

    “Australians love a scapegoat. The First Home Buyer’s Grant was blamed for driving up property prices … baby boomers were blamed for pricing first home buyers out of the market; there’s always someone to blame,” he says.

    “And at the moment, the Chinese are getting a bit of a ribbing.”

    This time we start with ‘Offshore Chinese investors and first home buyers generally don’t compete for the same properties.’ A simple bald assertion backed by nothing whatsoever. No comparison of what first home buyers would buy and where, and how much they would pay with the Offshore Chinese investors. No mention of Australian buyers who aren’t first time buyers. Why wouldn’t first home buyers want CBD apartments or residences in Box Hill and Glen Waverley – and if they did then wouldn’t they be directly affected by the Chinese buyers? From there we come to the obvious phenomena of buyer displacement. The CBD, Box Hill and Glen Waverley markets don’t exist in silos, buyers pushed out of them go elsewhere and prices get pushed higher all round.

    Then we get this pearler. ‘Most buyers of existing dwellings are migrants – or Australian Chinese. Offshore buyers have been snapping up new multimillion-dollar houses until FIRB rules were clarified at the end of last year.’ All buyers (not ‘most’) of existing housing are supposed to be Australian, and the FIRB rules have not changed in years, the only thing which was changed at the end of last year was that they are now going to be policed a little more (so it was claimed) – given that it has been amply demonstrated that they were not examined at all hitherto, that may not be much of a deterrent. The reference to multi-million dollar houses is to give the impression that it doesn’t affect ordinary (non multi-millionaire) people. But there is absolutely no reference (other than the bald assertion in the first sentence) as to why ordinary Chinese (or more ordinary Chinese than those who would buy multi-million dollar abodes) would hold off on buying ordinary Australian real estate in the same way if they too weren’t clear on the FIRB rules.

    From there we move to temporary resident visa holders and their entitlement to buy an abode while in Australia, but no mention (because there is nothing to mention) about what mechanism to ensure that any abode they buy is sold when their temporary visa expires. Then up pops Mr Ellis supposedly positing a Chinese buyer to the CBD and first timers to Caulfield train of thought (one wonders how many first timers would actually buy there) without a shred of data apart from the suggestion that ‘70 per cent of all new apartment buyers are investors’ to muddy the waters on whether they are Chinese investors or not, or whether than sentence is there for any reason whatsoever apart from padding out a paragraph with something which looks like some data.

    Finally we have Mr Ellis back to (thankfully) see the phenomena in broader terms, correctly identifying that Chinese buyers, along with First Home owners grants, and babyboomers are part of the rising real estate price issue, after noting that Chinese investors help stimulate construction (which they certainly do) and add to supply (which is more debatable if most/many of the new abodes never come on the market for rental).

    2. Chinese buyers with endless financial means are bringing suitcases full of money

    Esther Yong, director at Chinese portal ACProperty, says the majority of average buyers are looking at properties priced between $500,000 to $800,000.

    “A lot of people think they just walk up with suitcases of money, but that doesn’t usually happen,” she says.

    “Generally, there’s more news about people buying $5 million, $10 million and $20 million houses than just someone buying a $500,000 house … so most people think Chinese buyers are really rich.”
    Ms Yong says Chinese families usually plan and save for a property as a top priority, sometimes even over marriage.

    “[Property] is the first thing that families talk about when they sit down together,” she says.

    “It is something that’s embedded in the [Chinese] culture; first things first, own a property.”

    Chinese buyers are usually very cautious with their money and don’t like to overstretch financially.
    Mr Ellis says the majority of Chinese buyers usually make their investment decisions before visiting the property in Australia.

    “They certainly don’t bring any suitcases of cash because they’d be stopped at the Australia customs,” he says.

    There has also been a Chinese government crackdown on illegal offshore money transfers.

    Next batsman at the crease is Esther suggesting most Chinese buyers are after something in the 500-800K range. Obviously the ‘journalist’ (Ms Zhou) never asked herself the question of what most Australian (non-Chinese) buyers might be after because many would have thought they would be after broadly the same thing and come to the idea that the foreign Chinese buyer and ordinary Australian buyer were, in fact, after something so similar as to see them in some form of competition for supply, which would be a contributory factor in driving prices higher.

    From there Esther seems to think stories of Chinese rocking up with suitcases full of cash are overdone. I dare say they are, but having seen the videos on youtube, having heard real estate agents, auction participants, and buyers agents describe the phenomena, could they be completely discounted? She leads to (but of course doesn’t go as far) the question of who identifies how much money comes into the country, who identifies (or requires identification) the veracity of the money – as in who can say it is not the proceeds of corruption, given that we have every reliable authority on China suggesting it is one of the most corrupt countries on earth, and knowing that the sums of money Esther refers to (500-800K) are many, many times the average earnings in China. China also has laws preventing the capital flight of more than 50K USD per month. Is it worth asking of those who have already funded real estate purchases in Australia to state clearly and unambiguously that they are not the beneficiaries of corruption (and could we possibly ask for a reconciliation of Chinese taxation receipts with the income available to purchase Australian real estate) – and then follows up with a plausible narrative pointing to the desirability of real estate acquisition in Chinese culture. Regrettably she seems to think Australian Customs would necessarily prevent suitcases of cash coming into the country, but she does rightly note that the Chinese government has cracked down on capital exodus – not crackdown as in changing the laws, but crackdown as in enforcing them – which underlines questions about the legal status of real estate purchases made by non-resident offshore Chinese buyers made prior to the ‘crackdown’. But ultimately there have been Billions of dollars of real estate transactions in Australia funded from China. Would anyone writing this article, or anyone quoted in it really want to suggest that Billions of dollars of anything funded from China was corruption free? And how much corruption has been identified in Australian real estate by Australian regulatory authorities, despite every major crime investigatory organisation on earth stating quite clearly that the proceeds of corruption is being laundered through Australian real estate?

    3. Chinese buyers tend to overpay on properties

    Some vendors believe they can get top dollar for their property if they sell their home to a cashed-up Chinese buyer, but that’s not always the case.

    Chinese buyers like to negotiate, and some agents would even say they’re savvy buyers.

    Sure, they’ll pay a premium if they think it’s worth it, or it has unique features. But so would local buyers.
    Ms Yong says many Chinese buyers have family and friends living in Australia, and would help them with their research.

    Biggin and Scott Glen Waverley director Ming Xu says offshore buyers are rational, and are sensitive to exchange rates, immigration policy and how safe a country feels.

    Esther puts the piece on firmer ground when refuting suggestions Chinese like to pay over the odds for real estate, and quite rightly identifies that they are astute when it comes to money. She doesn’t go near the idea that if the priority of the offshore Chinese investor is only to get the money out of China – and here we need to go back to questions about the veracity of the money and how it came to be in Australia, and how this question isn’t looked at by anyone in the money transfer process, despite the word ‘Trillions’ being used to describe the volume of the corrupt capital flight from China – then maybe the astuteness of the offshore Chinese investor has a priority of getting the money out of China over getting value for money in the destination jurisdiction outside China. Biggin and Scott Glen Waverley director Ming Xu comes in at the end of the paragraph to lend some bien-etre with a gentle allusion to that phenomena using the code words ‘how safe a country feels’ as part of the buying consideration process.

    4. Chinese buyers aren’t concerned about dwelling size

    Investorist’s China 2016 International Property Outlook, which surveyed 150 real estate agencies selling off-the plan properties across China, found Chinese buyers are not looking for micro apartments.

    Mr Ellis says not a single agency said their clients would favour an apartment under 50 square metres.
    However, an offshore investor venturing into the Australian market may start off with a smaller property because it’s more affordable.

    “First-time investors might start with a property less than $500,000 … but once they’ve bought one, they then realise they want to invest in higher-value properties and they start [investing] in more blue-chip stock between $600,000 and $1 million,” he says.

    “The agencies now are directing their clients to buy bigger, more liveable properties.”

    Those in the market for more nebulous and specious claims about offshore Chinese buyers, thrown incoherently into a ‘news’ article need go no further than ‘Investorist’s China 2016 International Property Outlook, which surveyed 150 real estate agencies selling off-the plan properties across China’ (but has no indication about whether it included information about Chinese buying real estate in Australia). Mr Ellis obligingly brings in the suggestion that Chinese investors in Australia may be looking at real estate worth less than 500K, but Ms Zhou (the ‘journalist’ or ‘reporter’) still hasn’t twigged to the idea that this may in fact bring them into the realm of real estate which would be of prime interest to most/many Australian domestic buyers (and from there into an element of competition). Same applies to the 600-1 million range posited next up.

    5. Chinese investors leave apartments and houses empty because they’re not chasing rental return.

    Apartment buyers usually rent the property out, Ms Yong says, but Chinese buyers intending to migrate to Australia may keep a big house empty until they move so that the property’s still new.

    She says many of their users would jump on the rental section of their website to research potential rental return before they buy in an area.

    Mr Ellis says yields is an important consideration for Chinese buyers, and they’re especially looking for rental guarantees.

    The Investorist survey found investment is the number one motivating factor for Chinese buyers, followed by education, migration and lifestyle.

    “We drilled into investment further, and asked them what sort of yields they wanted, and they’re happy with 5 per cent,” Mr Ellis says.

    “They’re not wanting astronomical yields and they’re doing it for investment.”

    The strike is now rotated back to Esther to rebut the idea that any significant number of Chinese buyers of Australian real estate are leaving their purchases empty (and are therefore not investors), with the idea that some want to keep the place fresh until they can move out (without looking at the idea that if they are buying to invest then that is the basis on which they are allowed to buy real estate here – if non resident or non Australian – and that if they are buying on a putative ‘will become an Australian’ basis then they possibly shouldn’t be buying as investors, and maybe should start facing questions about when, and on what basis will they become Australians). Neither the journalist or the person quoted posit any plausible suggestion as to why so many new apartments in the centre of Melbourne sit there night after night without any indication they are ever used at all (and thus contribute sweet FA to supply or affordability in the local market and tend to exist more as – golden bricks which the new London Mayor has observed of foreign investors in real estate there).

    Esther notes again that Chinese are often astute in their investment decisions. This isn’t supported by the Journalist [Ms Zhou] harking back to the ‘Investorist survey’ which we have already identified covers ‘150 real estate agencies selling off-the plan properties across China’ and seemingly points to the possibility that Ms Zhou is incapable of distinguishing between China and Australia in the context of writing an article ostensibly about Chinese investors in Australia (and exploding the myths revolving around these). Esther suggests that they have ‘drilled further’ into their Chinese investors to discern that these are ‘happy with 5 per cent’ without either she or Ms Zhou [The ‘Journalist’] ever going within a bulls roar on how this drilling may occur, the methodological basis for doing so or even if the same drilling might reveal any particular awareness of their rights and responsibilities vis Australian law and the real estate acquisition and anti money laundering processes. That’s all topped off with another bald statement to the effect that “They’re not wanting astronomical yields and they’re doing it for investment” without distinguishing it from any desire to simply get their money somewhere safe outside China.

    6. Most Chinese buyers shun properties with a street number 4, and the right number play a big part in their decision making

    It’s true that the number eight is linked to good fortune because its pronunciation ‘ba’ in Mandarin, and ‘baat’ in Cantonese, sounds similar to the word for prosperity.

    And sure, some buyers might even pay a bit more at auction just to land on $888,888.

    Likewise, the number 4 is seen as unlucky because it sounds like the word die.

    But Mr Xu says the sale price will more likely depend on the property, particularly for younger Chinese buyers.

    Finally we get a bit of slap and tickle at the end of the piece for numerology buffs and the superstitious, with a veneer of common sense for all buyers enunciated by Mr Xu at the end.

    The really sad thing is that Fairfax is using the media playbook, processes and approaches, from a totalitarian state to flog real estate in Australia without looking at whether it is in contravention of Australian laws or even Australian interests. From there tragedy unfolds the moment you think they are ditching real journalists who have proven themselves over a number of years to provide this bullshit.

    • Gold! I also have news for Ms Zhou and her non existant editor, Prahran, Richmond, St Kilda aren’t anywhere near affordable and have all been bought off the plan… By Asian buyers… How do I know? The signs are in poor English, and so I’ll told, good Mandarin

    • Tl,dr all of it, but meh, what do you expect from an outfit that peddles “news” as an adjunct to their Domain arm? I notice AFR is also pitching RE like there’s no tomorrow, featuring young guys who have made hundreds of millions of dollars by building apartments, then an article called “Rich List 2016: Property the path to ultra-wealth”, then Niall Ferguson telling us good times are ahead (so time to buy property is now), then “Why first-home buyers have it better than their parents” etc etc, quite nauseating.

      BTW, WTF is wrong with this site at the moment? Slow as buggery and with a big delay on page refresh, and some fucking script that bounces the whole page about 20 seconds after it loads, snatching your cursor away from the comment box and fucking things up generally ❓

    • Now there is a ‘piece’ with a new one!

      Thanks.

      BTW I am having issues with the site today too. Really slow. Maybe too many links for this weekend? (it is a huge load)

    • Original John

      Nice piece Gunna. My wife was at lunch yesterday with her cousin who bought a property here in Shanghai for RMB20 million cash. Cash came from selling a place in Beijing for a lot more than 20. Not all money leaving China now or in the past is from corruption. Also, very hard to find suitcases of AUD in China, USD was easy and still is with right connections. Trade arrangements were and still are routinely used to move cash to Australia. Look at the HK trade figures to see what I mean. A lot here is hidden in the resources trade figures, but I know first hand how ag products are used to move cash from China to Australia. I can guess that some of this is used to purchase local property but I have not seen it.

      As for returns, not sure who they are talking to about returns, what we heard over here from a friend who went to an Australian property expo was 20%+ per annum returns on capital gains with guarantee for 5 years at 7% on the Gold Coast and Melbourne. Hints were made a few years ago that buy 10 off the plan and you can get your PR quickly.

      Watching bitcoin boom right now – this will be a fun bubble – how high with RMB rate go?

      Going through VPN so thought it on my end, but like R2M and others said, I have seen snails having foreplay that was quicker than this page loading and seemed to be more fun too.

    • Gunna – why you waste time reading such junk? And wasting your talent to respond to such junk. But I did end up reading it just because of your response and I can see why you respond with such passion.
      We all know how this ends we just don’t know when. If China decides to tackle the zombie companies and finds a way to stop capital outflow the music here will stop within months. .
      Otherwise we will be watching the show for couple of more years.

      • Original John

        At the end of last year, we heard from sources in China that fund outflows were being tackled in a systematic fashion. At the time, some postulated that gold would be one channel to get around this. I posted at the time that while the older generation liked gold, the younger went for bitcoin. All I think is happening is the crackdown on capital flows is reaching a crescendo and money is looking for any and every avenue to escape ahead of a PBOC move (this is what I hear, relatives bought physical assets such as commodities ahead of the run-up including a shitload of rebar which they sold for August delivery). So until there are limits or more likely a PBOC crypto-currency (google it, it is approved in principle) on RMB to bitcoin, it and trade invoice manipulation are 2 of the easiest and last avenues for currency escape.

        Crappy weather over here, pollution is shocking still – all that the rain does is wash the crap out the atmosphere and onto to everything it touches.

    • Paddy Finucane

      It is a bit sad when you think how shitty that article is. No facts, no logic, no nothing – just a ‘it isn’t the Chinese buyers fault’ message. Domain has really become the parasite which took over the host.

    • bzunicaMEMBER

      I find it interesting that the domain articles don’t have the comments open where many other Fairfax articles do. I think they don’t want the “journalism” in domain criticised.

  28. frag outMEMBER

    The in laws attended a local auction in Brisbane suburbs yesterday for a 405sqm block. Auctioneer kicked off at 600k (house was a knockdown btw) and then proceeded to remind the stunned attendees that the owners have a reserve north of 800K. Apparently people simply walked away, which made me feel only slightly better.

    • I guess, if the auctionieer had a soul, it would’ve died a bit as that happened. But, since they’re all dead inside, or sold their souls to the devil – it’s ok – he felt nothing more than the need to pass gas.

    • It’s ‘worth’ 800k, you see. Except for the minor point that no one is willing to pay that.

      2013 was the absoloodle all time peak for real Brissie land prices. Those prices will not be seen again in our lifetimes (nor ever I believe). Even with the AUD dropping by 30% with more to go, nominal prices have peaked.

      • Sounds good to me LD. I took your advice and left Australia around the start of the year, started earning a similar wage in North America and every cent the AUD drops is music to my ears. At this rate I’ll be able to buy my parents a nice place in Brisbane in the a year or two.

  29. lol, it’s funny to see people holding onto the notion that China will continue growth (impossible) and not isolate itself (it has already begun). Sell your fucking houses morons… gah

  30. BoomToBustMEMBER

    Try Express VPN, paid subscription ($100USD/year I think), very fast everywhere I know of. You might have to experiment with some encryption types in the menu to find one faster than another if automatic doesnt give you good speed. Alternatively for free software try Psiphon. I spent weeks trying to block it at a school, very tough to defeat and speeds are not to bad either.

  31. “It is also important in this context to note that the term neoclassical, introduced by Thorsten Veblen, is a bit of a misnomer adding to the confusion.[2] The term presupposes a continuity between the old classical political economy authors of the surplus approach – the authors from Petty to Marx, including Quesnay, Smith and Ricardo, that assumed that real wages were exogenously given – and marginalists, the neoclassical economists, which assumed that real wages are endogenously determined by supply and demand like any other price. Adam Smith, for example, was a liberal in the sense of wanting laissez-faire, but his theoretical framework was very different from neoclassical authors like Milton Friedman, a modern champion of free markets.[3] In other words, the policy stance in favor of non-intervention and freedom of markets is a poor guide for the underlying theoretical framework or the political views of the author, which is something well understood by Mirowski. But there is an important implication that is lost in his distinction of the Old Liberals and the more recent Neoliberals, which he sees as a group developing, after and as a reaction to the Keynesian Revolution, around the Mount Pelèrin Society (MPS).

    The liberalism of the classical authors was based on the notion that the rising bourgeoisie had a revolutionary role, something noted by Marx in his Communist Manifesto, and was a reaction against Mercantilism and the remnants of the Ancien Régime.[4] Neoliberalism, in contrast, should be seen as the resurgence of a free market ideology, after the onslaught on neoclassical economics by the Keynesian Revolution. It was the ideology of the anti-New Deal, anti-Keynesian conservatives, which was finally victorious in the 1970s, when the marginalist ideas had already proven to be incoherent by the capital debates.[5] In other words, while the old liberalism was a progressive ideology at the service of the nascent capitalist system radical transformation of the structure of production and the social relations associated with it, the modern resurgence of neoliberalism is a conservative ideology at the service of the maintenance of the status quo. It is fundamentally what can be referred as the return of vulgar economics (Vernengo, 2013).

    The rise of vulgar economics correlates with the dominance of Neoliberal ideas has been mistakenly connected to the notion of a small State. As Mirowski notes, Neoliberalism is less about the reduction of the size of the State, than the changing of its functions, and the use of the power of the purse to promote the interests of corporations. This indicates a certain degree of intellectual duplicity at the core of the NTC. But there are many layers to what may be termed the organized hypocrisy of NTC. This is what Mirowski (2014: p. 30) identifies as: “the ubiquitous political necessity of saying one thing and doing another.” For example, in spite of their praise of individualism, democracy, and open societies, Neoliberals tended to group in organizations that were closed, not particularly democratic, and somewhat dogmatic, with little or no dissent admitted within the ranks of organizations like the MPS. Paraphrasing Karl Popper, the MPS and fellow Neoliberals might as well have been called the Closed Society and its Friends.[6]

    But at the core of the organized hypocrisy of the NTC is the lack of preoccupation with the logical consistency or the empirical evidence favoring the notion that markets are indeed efficient when unregulated and unconstrained by government intervention. The incredible limitations of the whole intellectual project are made clear by Stedman Jones (2012: p. 88), who argues that: “Neoliberals were not usually exercised by the question of how … [the] neoclassical models could be proved or whether they worked.” In fact, Neoliberals in general extended neoclassical principles into unexplored areas, leading to more radical insights on the areas of monopolies, trade unions and regulation, denoting the ideological zeal of the preacher, rather than the logical and empirical search for knowledge of the researcher, even if the latter is not always neutral.” – snip

    https://ineteconomics.org/ideas-papers/research-papers/who-is-afraid-of-neoliberalism-a-comment-on-mirowski

    Disheveled Marsupial…. file under when some think they have the – grand unifying theory of everything – “homo economicus”, then apply it to everything, but never thought to check if its base assumptions or metrics were correct… wheeeeee….

  32. SITE ADMIN – ATTENTION – ATTENTION – ATTENTION – ATTENTION – PURE DOMAIN TURD – GOLD – GOLD – GOLD
    By Christina Zhou at Domain…..
    http://www.domain.com.au/news/busted-six-myths-about-chinese-property-buyers-20160527-goi2jv/

    My wife is Chinese, when she read that, she said “that’s bullshit”

    Surely deserves a write up response from this site? If you do, please allow full access, as there will be heaps of RE people on Linkedin using Christina’s latest piece, need full access for response.