Weekend Links 20-21 August 2016

Planes of Perception Erica McGilchrist 1958 NGV

Planes of Perception, Erica McGilchrist, 1958, National Gallery of Victoria




United Kingdom

United States


Terra Incognita


Capital Markets

Global Macro

…and furthermore…


  1. Urban planning: What’s broken and how to fix it | Productivity Commission of New Zealand



    Draft Productivity Commission report on better urban planning now available.

    The Productivity Commission is seeking feedback on its proposal for a future urban planning system in New Zealand.

    The Commission released its draft report Better Urban Planning today. The inquiry examines the current urban planning system in New Zealand and the Commission’s report suggests different ways of delivering urban planning. … read more via hyperlink today …


    New Zealand needs successful and high-performing cities | Scoop News




  2. First!
    I’m impersonating Haroldus here 🙂

    And to give my comment a piss weak chance of not being deleted, the air in Beijing continues to be amazingly CLEAN. There is absolutely no comparison between this year and last (and my lungs and general health can tell the difference). We have FINALLY moved out of the unusually strong sauna of a summer we have had and are now basically into crystal clear warm/hot autumn days with the humidity dropping dramatically; it’s amazing how clean air can actually be, sadly you do forget. So whoever controls things has managed not restart whatever is responsible for our pollution in a big enough way that we actually get clean air. Or maybe the policy to reduce Beijing’s population by 15% (approx 2 million people) by 2020 is showing some early results; the traffic does seems to be less crazy than before, but that could just be the slowing economy, who knows?

    Clean air is awesome. Now if only we could have safe water and food… Enjoy your weekend wherever you are in the world!

    • How does Sydney traffic compare to Beijing?

      Surely it doesn’t take longer than an 1h20m to travel 12klms.

      That’s what Sydney should be doing; depopulating. Instead we’re having another million within ten years (or something like that), with almost zero additional infrastructure. We are not asked if that’s what we want, it’s a fait accompli. A given. It’s discussed as if it’s beyond our control.

      I watch what’s going on in Sydney, the behaviour is “frogs in boiling water”. It’s remarkable to see.

      People blame trains and hospitals, roads, bad drivers, and wet weather, negative gearing and greedy developers, but rarely population growth. Beyond bizarre.

      • couldn’t agree more Richard, I’ve been saying for a while the future is to encourage mass movement from Sydney and Melbourne to the regions such as Newcastle / Dubbo / Woolongong / Ballarat / Geelong / Bendigo etc etc. Save the infrastructure spend and use it instead to subsidise income tax cuts as an incentive just for tax payers in these regional cities eg. 7-10 % off your marginal rate for a period of say 10 years (because I’ve got 10 fingers in case anyone was asking).
        Funnily enough the states would’ve been able to do that if they had accepted Turnbull’s offer to raise income taxes of their own (constitutional concerns aside).
        For me its an obvious thing to do, why leave it for the tree/sea changers only?
        Depopulation? Great idea. All things being equal it solves climate change also, boom!!

      • Funnily enough the states would’ve been able to do that if they had accepted Turnbull’s offer to raise income taxes of their own (constitutional concerns aside).

        In theory yes, in practice no because the Feds would never lower their income tax enough for the States to be able to do anything useful.

        A Land Tax would achieve what you want and is well within the remit of the States to levy.

        The simple truth is that the States don’t *want* people living outside a handful of major population centres.

      • @drsmithy

        “The simple truth is that the States don’t *want* people living outside a handful of major population centres”

        I’d never considered that. I reckon you’re right. Far easier and cheaper for them to provide services in congested areas than spread out around the country.

        “A Land Tax would achieve what you want and is well within the remit of the States to levy”

        AND be passed to the Federal government via negative gearing. I’ve always wondered why the states don’t do it. A rebel state government could add $10k cost a year passed on to Federal government (an anti high house price state gov even). I know it’s more complex than that and Fed would starve GST funds and more. There’s probably constitutional power over states too.

      • I’m from Melbourne so I wouldn’t know about Sydney. I live at Dongzhimen 东直门 in central Beijing (just inside the northeast corner of the second ring road if you want to check a map), so very central. If you want to go out into the suburbs in a car in Beijing you can sometimes get stuck in traffic for 5 hours (traveling maybe 60-80km) if it is a major holiday or there is a bad car crash, otherwise being stuck in traffic on the weekends for 3 hours for that type of journey is normal as far as I’ve heard. So I never go on the weekends as I’ve got chronic fatigue syndrome and chronic pain so sitting in car for that long and trying to do something like go hiking just doesn’t cut it for me. If I want a dose of green I go to a Chaoyang Park.

        I haven’t read too much about the depopulation policy but I’ve heard they are targeting to remove the old people from inner BJ (hutongs etc) and ship them out to the suburbs. They are also trying to force out some types of small merchants (high rents are doing that anyway), mainly clothes sellers and they are closing down ALL the wholesale markets within the 4th ring road, so that’ll get rid of a lot of small time merchants etc. A high placed student told me a few years ago the central government told the BJ government if they didn’t improve the livability of the city the central government would move. I don’t that was a genuine threat, but it probably put a rocket up the butt of the BJ gov to start improving things faster if it is true. I used to work for the National Centre of AIDS/STD Control and Prevention which is part of the Chinese CDC. After SARS people realised the CDC was located in the central south of Beijing and they weren’t happy all their labs were there doing tests on dangerous diseases, so they had to move out to Changping District. They built a fancy new campus based on the US CDC but it took them over a decade to actually make the move as no one really wanted to go out there except all the younger staff who had purchased apartments near the new campus knowing the move would eventually happen. Everyone else had to move from downtown Beijing to the suburbs, but quality of life would definitely be much better out there.

        The Chinese government is very good at seeing a problem, or responding to (certain) grievances, and then figuring out a solution and implementing it. They do some elements of governance very, very well if you ignore things like community consultation and a few other things I don’t exactly feel like putting into writing. And to be honest, many Chinese are totally fine with that because it gets results and is generally for the benefit of the group (of course some people who lose land and villages/community etc. are not but many would accept the system works to an acceptable enough degree).

      • @Popcod

        After the revolution, I’d like to move all today’s politicians promoting (or not addressing/opposing) mass population growth to Beijing.

        Hopefully before we become Beijing.

    • ErmingtonPlumbingMEMBER

      Plenty of freezing cold fresh air at St Ives Showground last night,….iI dont know if Ill be so quick to volunteer next year, as part of the support crew for the my friends doing the annual, Oxfam 100km charity walk.

      After getting to Bobbin Head at 7.30pm, they dont arrive to that check point until 10 pm!,…after they set off again, I go straight to St Ives Showground (around 11.30pm) to set up a tent, setup a cooker etc and wait.

      Of cource it starts to pour down rain with howling wind the very moment we start to set up the tent, then a very average sleep with wet cloths on until 4am, when they arrive, wait whilst they sleep, pack up,…then oddly back to Ermington to pick up the ute and go straight to a $300 jetblasting job at near by St Ives shopping centre.

      Stuffed as I am, Im sure I dont look like my foolish friends trying to walk 100km through the bush in a “best time,” they looked totally rooted at the 58km mark.

      I am now heading home and going to bed.


      • I had a night in reading and at about 1am BJ time decided to check what my weekend reading would be, and as no one had made a comment I just couldn’t resist!

        It took me about 20 minutes to write it as I was checking my details on the depopulation policy and messaging a friend at the same time so I was kinda worried about being second and looking like an idiot.

    • Hey Pop, I was talking to my team in Donghai on Friday more illegal foods found in Chengdu after a big crackdown. But another high net worth Chinese person in our circle just announced they are leaving Australia. Sold everything! 2 weeks on his penthouse, no offers so fire sale – lost $500K. Q7 sold for $20K – 25,000km 2 years old. All furniture, investments everything. Goes back this weekend. 3 drivers for his departure – lack of opportunity in Australia, better quality of life for him and his family in China (they have driver, maids, etc) but big one was improvements in China he saw during his last visit to Beijing and Shanghai. His comments have caused a remarkable stir in the groups I associate with over here. He was in Australia for 25 years!!!!

      • Damn, that is steal at 20k for a Q7. I am in the market for a used SUV. Second car once Model 3 arrives in 2 years time.

      • Yeah did you hear about the meat scandal a while ago where they found decades old frozen meat being sold? As I’m vegetarian I didn’t pay much attention beyond ‘thank god I finally went veggie’, but yukky yuk. Yeah NOTHING surprises me anymore about the depths that people will sink to, but also there are ways to protect yourself from it if you have the knowledge and the money.

        WOW, just wow about your friend of 25 years in Oz, but also not surprising. Goes back to what we were chatting about this week wrt Chinese migration. So now our combined anecdotal list of Chinese who have left Australia or decided not to migrate includes: PHD students who will return to China after graduation instead of migrating as originally intended, professional Chinese families with kids who migrated in 2015 but lasted less than 12 months in Australia and returned to China because it was too expensive, and long term Aussie Chinese leaving for better opportunities. I’ve got a lawyer Malaysian Chinese Australian friend in BJ who says she can’t return to Australia even if she wanted because she can’t work in Australia as there are no jobs, so she’ll only be able to retire in Australia (she doesn’t have Chinese citizenship).

        Every now and then I look around me in Beijing and I am just stunned at the changes here. I first came in 95 as a uni student for a semester and there is just no comparing this place. The social evolution is just mind blowing. Yeah China has got some serious problems, as does everywhere, but actually I’m pretty confident about this place’s future. I might not be doing business deals but I get to talk to a wide range of employed Chinese professional of all ages in many industries and I am repeatedly impressed by how good they are, how good their English is for people who have never lived overseas and how open minded they are. They have changed so much in the past 20 years, and all of this change has been positive. So yeah there are genuine opportunities here.

    • I made a comment before yours, it was deleted, and that’s all that needs to be said about that comment ?

      • I’m really curious about that now! And I’m not surprised someone got in before me, which is why I posted some useful info about drivers of Chinese migration (aka the improving air pollution situation).

    • Hey Popcod well done – very cunning plan to put some actual content to the first! Not only do I get deleted, but I get smartarse comments from a fool. The lord works in mysterious ways.

      Warning boring garden stuff below.

      I have 3 beds in now but my seedling transplanting skills leave a bit to be desired. I transplanted quite a few tomato seedlings from the starter tray into mini pots but they didn’t do very well. So I need one pot, germinate in that and then straight into the beds.

      I am buggered if I am going to pay Bunnings .30 for a cardboard pot so have taught myself to make newspaper pots large and small. I fill the bottom with seedling mix and the top with reconstituted coir and wick up from the reservoir at the bottom of the mini greenhouse trays. The small ones fit right into the trays and I have a brainwave of laying jute across the spaces so I can pull them up from the bottom rather than the top.

      I’ve done climbing beans and broad beans and they look like they’re shooting up.

      Did actually put some corn in directly and they’e coming up. I didn’t realise corn was a grass but when you see the shoots they look just like it.

      Tomorrow is garden day – I have to go to Bunnings to buy a very cheap whatever and pick up as many large boxes as I can get away with. I think it was darthbaeder the other day who recommended putting manure under the paper/cardboard layer to encourage the worms so have been doing that.

      I got a couple of tater bags and some heirlooms to put in – will do that tomorrow too.

      Also thinking of getting a small composter. Anyone got any suggestions?

      Anyway more tomorrow.

      • ErmingtonPlumbingMEMBER

        Having grown a large variety of different types of tomato in the past I have stuck with the “Improved Apollo” for over 6 years now.
        A very reliable, tasty, heavy fruiter and the most disease tolerant I have grown.
        Ill be planting 6 more next month in a new plot.

      • Thanks EP I’ll see if Bunnings has them via Yates tomorrow. BTW I asked if my lead singer who has a Harvey Norman trade plumbing franchise knew you – but he didn’t! I reckon it would be one degree of separation if you guys met. We’re playing the townie newtown in early september if you are remotely interested. Be finished by 12.

      • Hey Haroldus! Yeah I was stoked, that’s the first time I got a weekend links first 🙂 I wouldn’t call it cunning, but I’m a bit of a strategic thinker.

        Sounds like the garden is going well, with only a few minor setbacks, and those are probably to be expected. I love how you’re continuing to stick it to Bunnings with the DIY. My mother gets extremely pissed off at how much money Dad is always spending at the place. It’s looking like I might not make it back to Oz until early winter (my chronic fatigue syndrome is so much better this year so I’m hoping I can do some traveling before moving back to Oz), therefore my gardening odyssey will probably have to start spring 2017.

        The olds grew some Black Russian tomatoes on the Mornington Peninsula pretty successfully for a couple of years. My god they were the most amazing tomatoes I’ve ever eaten. Then something happened and they had a bad couple of years so Dad pulled them out.

      • ErmingtonPlumbingMEMBER

        Yes, Black Russians were the tastiest variety of tomatos ive grown, but you dont get many per plant and thay seem very disease and pest prone, not to mention that they go from not ripe to over ripe in only 2 or 3 days!

        As for your mid September invite Harry, ill be there,… is that invite open to the whole MB comentariate or just fully paid subcribers?

  3. Fortesque
    Shorts must be hurting, big time.
    Gone up from Jan 2016 low of $1.44 … amazing .. it’s now almost $5.00
    Ouch ….

    • Yep – I’m short at $3.69 and it HURTS!
      And my AUDUSD shorts at 73.36 aren’t helping either 🙁

      • Not being cruel here, just trying to help:
        But, since profits probably absent against which realised losses can be offset in same financial year (sorry), means that carried forward losses only possible if deemed a share trader by ATO. So, attempt getting an ATO ruling (application to be considered ‘professional’ share trader = tantamount to being considered ‘running a BUSINESS’ … soon = takes ages for it to be granted). In the case of the latter, carried forward share/related trading losses then allowed ( for obvious EVENTUAL offset against latter financial year profits)

        One does not have to keep the faith, Stomper … imagine [Note 1] if IO continues to improve further [ it is poised to do that, from a seasonal perspective, over next 3 or 4 months] what will happen to FMG price given it’s magnificent current production cost position and vastly improving debt position. Note 1: So very highly geared to IO price = it’s share price has trebled while the IO price has only gone up 50% over last 6 months.
        I do relate to the financial + personal effects of your position and truly hope the above helps.

      • Ponti – he/she can carry forward capital losses for offset against capital gains achieved in future periods. You are talking about carrying forward an income loss aren’t you? Btw – you can claim that carry forward income loss if you want, you don’t need the ATO’s permission in advance to do that but as you allude to a ruling can help you from being audited should you do that. Happy to be incorrect here but that is the way I understand it.

      • I think one can deduct losses from CFDs under TR 2005/15, regardless of whether you are “professional investors” or not. After all, if you are not a “professional investor” then the only reason for trading CFDs is “for the carrying on or carrying out of profit-making undertaking or plan”, is it not?

        But it requires notification to the tax commissioner at the same time or before filing a tax return, who I assume is the same as writing to the ATO? Does anyone know more or better?

      • @Travis + Dumpling.

        Travis: No – you not right.I’m talking about ‘carrying forward’ the trading capital losses from one financial year to FUTURE periods. So, you definitely cannot do that without having a ‘professional share trader’ (= all results from trading deemed income) deeming from ATO = no doubt about that. [ Some people simply form a ‘small company’ trading entity to achieve this ‘carry-forward’ if ATO denies the deeming … but ‘small company’ entails huge admin burdens]

        Dumpling &Travis: Obviously, all trading losses (including CFD-related) during the SAME period can, without any doubt, be subtracted from profits during the SAME period, no doubt about that, either.

        Hope this helps.

      • Ponti – I see what you are saying and you are right if you are doing it as a business (ATO’s point of view). I should’ve qualified my reply to be from the point of view your average punter (not carrying on a business) who is doing this on “capital account” as against “income account”. If you are NOT trading CFDs in the “ordinary course of business” ie. a fair chunk of us, then losses on CFDs can be carried forward to offset against future CAPITAL gains. CFDs as an asset class don’t assume special treatment just because you are an individual (again not conducting a business), carried forward capital losses can offset against future capital gains just like any other investment.
        TR 2005/15 is really a tax ruling about whether you are a business or an individual, its incidental that its about CFDs. It could have been about gambling and if you are professional punter or not.
        Apologies if I confused initially.

      • Yeah I’m kind of glad I didn’t attempt to short miners, and AUD this year. I think safer to go for Gold and keep earning interest in a bank account. Although it is taxed unfairly too!

  4. FiftiesFibroShack

    Vancouver’s housing market ‘adjustment’ shows just how much foreign capital is likely playing a role in Sydney and Melbourne, IMO. Pollies are willfully blind. It does provide some insight into why our new tougher enforcement regime seems to be doing the bare minimum to suggest it even exists.

    • GunnamattaMEMBER

      Thats actually a very good read, cheers.

      I do think Australia could do something with the vast amounts tied up in Super, but theonly way to do that would be to tell the superannuants that they will be looked after in some way equally as well as they ‘think’ they are with whatever they have in Super. I would posit that for the vast bulk this wouldnt be much of an issue. But that minority would be exceptionally well funded and profoundly noisy.

      • I’d resist it because I don’t trust them. After the biggest mining boom in history, population growth and debt, we’ve got nothing left.

        Once we get to the stage of stealing everyone’s super it’s desperate times. They wouldn’t change behaviour, leading to bankruptcy along with my hard savings lost.

        The ONLY way I’d even listen to what they’ve got to say is if my super bought me ownership of the assets. i.e. collateral for my money.

      • GunnamattaMEMBER

        Thats a reasonable call for mine. I dont trust them either (either government to use it properly or provide the pension) or the macro policy to drive reform (they’d probably shunt it all into real estate speculation)

        But ultimately unless we do something about trust in regulatory authority and government and collective and progressive (ie the rich pay) public investment then this place is screwed. And that I suspect is the tragedy of having completely blown a mining boom. Those who blew it will be prepared to screw a population to try and prove their ideological point – until someone bigger opts for major public investment..

      • Gunna’
        We don’t have Trillions (or hundreds of billions) tied up in Super. It’s all relent and invested. To redeem it for some other purpose will cause major disruption.
        Note a country running a chronic and serious current account deficit (virtually) cannot have savings

  5. I work for asic and it’s interesting to read the public perception of the registry selloff.

    The only reason for the sell off is that we’re running 20yr old mainframe that’s at capacity, too many legacy systems with bad data that generates 800mil in fees but it’s too hard (or too expensive) to fix so se’ll it and its someone else’s problem

    • GunnamattaMEMBER

      I was told this week that much of Defence (the department responsible for defending Australia) is still running windows XP – indeed I saw it with my own eyes – and they have this document storage system which looks like something out of the 1960s which could have been developed by the old PMG.

      Any chance I could get in touch with you? I am trying to put together a big comprehensive look at Australia’s public sector – my email is [email protected]

      I have started on it, and have been related some classic stories about things happening in Human Services, the ATO and some others, but havent had the chance to chat with anyone at smaller outfits.

      • “…
        still running windows XP…”

        What do you think would be the main advantage of using say Win7 of Win10 on a closed system with limited and known number of applications being ran?

      • When Arnie was asked if he wanted to upgrade to Windows 7 he said ……..

        Ah still love Vista, baby!!!!

        Try the veal, I’m here all week.

  6. As a follow up to yesterday “we failed at the olympics” post.
    Australian gold medal count = 7
    Australian gold medalists = 22
    Its plainly absurd to base performance/cost of medals on the medal tally since anyone playing a team sport automatically become less valuable.
    With this in mind we have actually won an equal proportion of gold medals to team size. (I haven’t done the analysis for total medals.

  7. Mining BoganMEMBER

    The David Stevens look at how we commemorate. Quite liked that. We seem to forget we were in the wrong on occasions. Anyone who has been to the War Remnants Museum in Saigon would know that they’re still a tad sensitive about it all. Tehan is a jerk.

    If you ever do get to Gallipoli go and get a guide who tells the Turkish story. I, typical tourist, thought I knew the story. Nope, knew nothing. The Turks like the tourist dollar but maybe they like it more when it comes from people showing respect.

    • GunnamattaMEMBER

      The Turks certainly do. As someone who has done Turkey (regularly and often) I would not that they show the utmost respect for ANZAC/Gallipoli in particular and far more than would be shown them if it had been an invasion of Australia by Turks we are commemorating.

      The stink over Long Tan has been depressing. The Vietnamese have been quite reasonable about allowing small quiet groups of Australians access to the site. The last thing they would want (and rightly so) is a site where a load of drunken Barnsey listening yobs descend once a year.

      • What used to be a Saturday march to remember the appalling costs of armed conflict and pay respect has become nationalistic fervour led by politicians salivating for photo opportunities. I mean for Christ’s sake there is a freaking song and dance for every damn battle fought in every theatre of war to the point where the whole purpose of remembrance has been lost. We’ve even got young children being fed the glorified elements of war in schools by people who have never experienced the horror. This will bite us in the future I fear. If old soldiers want to tell war stories then the RSL bars are where they can rejoice in past glories without the politicisation stuff.

        But in regard to Long Tan, Vietnamese citizens themselves are not permitted to gather in numbers for any reason. Surely Australia or our servicemen are being naïve to expect Vietnam to allow past aggressors to be permitted to assemble in their hundreds and dredge up this stuff? Dignitaries laying wreaths in respectful cooperation are appropriate, but a little Patty concert and boozy dinner are an insult. Considering little Patty, I think missing that was a hugh favour.

      • nationalistic fervour led by politicians salivating for photo opportunities

        Specially odious when you have the ilk of the rodent or ming all gung-ho to send other people’s kids to be slaughtered.

        From Ming wiki “His candidacy was nearly defeated when a group of ex-servicemen attacked him in the press for not having enlisted, but he survived this crisis.” (https://en.wikipedia.org/wiki/Robert_Menzies).

        So, too gutless to conscript, deal with the enemy (right pig iron, or how about those wheat deals rodent) send others to fight, ignore vets when they return and put that sickening hand over the heart every 25 april.

        and anyone remember this choice cut from clownshoes (http://www.smh.com.au/federal-politics/federal-election-2016/tony-abbotts-office-floated-sending-australian-troops-into-ukraine-conflict-defence-expert-claims-20160612-gphbab.html). the fucker wanted his own bloodbath.

        sickens me when they talk of sacrifice – it’s always someone else who has to sacrifice.

        ps I love how vlad’s looking at clownshoes in that shaking hands shot. “this is pretty girl”. Doesn’t look like those famous abbott people skills are working.

      • This letter in the herald today (http://www.smh.com.au/comment/smh-letters/long-tan-a-long-time-ago-but-still-has-lessons-20160819-gqwfhv.html)

        Congratulations on publishing some well reasoned letters giving a different perspective to the Vietnam conflict in general and Long Tan in particular (Letters, August 19).

        As a Conscientious Objector to that conflict, I consider myself fortunate to have been the beneficiary of wisdom and support, in particular, from both parents who fought in World War II and who were adamant that it was the war to end all wars.

        One of my late father’s observations resonates to this day of the Menzies Coalition government as comprising “Super patriots and antipodean Tories, who love to wrap themselves in the flag but make sure they don’t serve under it”.

        What a sad display by our Veterans that their anger and frustration is directed towards the long suffering Vietnamese and their government and not the representatives of LNP who were responsible for their anguish and suffering in the first place.

        Ian Harvey Ettalong Beach

      • I hat the way the VN veterans ‘pretend they are conscripted victims or that conflict, they are party to distorting the history and kids of today believe the Vets national servicemen had no choice in going to VN .

        And yes there seemed to be an representation of beer gutted yobs, wanting to visit LT. The fact that the battle was against VC implies that the death roll would include many local people, children, girls/women and this should be kept in the minds of visitors / organizers etc

  8. If Hillary Clinton gets in, ANY criticism of her will be considered ‘misogynist’. But Trump, call him whatever you like.

    • The world is so far absorbed in political correctness now that any criticism of someone who falls into a perceived disadvantaged or minority group automatically makes you a bigot, homophobe, islamaphobe, xenophobe (is that really a bad thing?), misandrist, misogynist, racist etc..

      It’s the quickest way to shut down any debate or freedom of thought.

    • It is a biased and controlled world and it works for the elite. They found mass control tool while the herd think they have the power of freedom to chose who to vote for.

      • adelaide_economist

        And as expected that article is heavy on the claimed misogyny but doesn’t address the reality of Hillary clearly experiencing ‘odd’ things – on camera, during this presidential campaign (the photos of her needing help to walk up 5 stairs, and the doctor trailing her with the medical injector 24/7 are kind of indicative of something). But yeah, if you let media – any media – guide you these days on how you should think you would be missing an awful lot.

  9. Posted this late yesterday:
    What does it really mean when Aussie Banks fully hedge a US issued bond?
    Sounds like a trivial question that should be answered with some snide quip like GIYF.
    BUT is it a trivial question?

    So I searched the RBA to see what they’d written on the issue…The best analysis that I can find is
    Foreign Currency Exposure and Hedging in Australia
    it’s a bit dated (2009), it’s pretty comprehensive BUT fails IMHO to answer four fundamental questions.
    Who are the counter-parties to this hedge?
    Why are these counter parties willing to take on a Risk that’s considered too big for our largest Banks to handle?
    For what magnitude of exchange rate shift will these counter-parties remain solvent? (hint google LTCM)
    How do these Counter parties manage this risk?

    For me the most intriguing question is the fourth …How do these Hedge Counter parties manage this risk?

    If we look to the corporate world for some hints, we’ll see that Corporate Bonds are often hedged against Corporate Equities. In essence the Buyer of the Bond shorts (or synthetically shorts) the shares / Equities of the Bond Issuer. If the value of the Shares falls they simple increase their short position to ensure a fully hedged loan …hmmm don’t need to be a genius to figure out what happens when the SHTF. Sometimes this continuous Hedging is built into the Bond in the form a Convertible Note with a resettable conversion ratio (Bonds of this type have justifiably earned the title: Death Spiral Convertibles).
    OK so lets assume the same rules apply and the Exchange rate risk for these Aussie Bank bonds are hedged against their Equity with synthetic Short positions. Just how would a Hedgie go about the task of constructing this sort of synthetic Equity Short? There’s a name for these sorts of plays, they’re called Exotic Derivatives. but there’s another big problem when the magnitude of the Bonds vastly exceeds the Market Cap of the Issuer, which takes us right back to the fundamental question: How do the Hedgies lay off this bet?
    And what does the “laying off” of this Hedge mean for Australia if/when the economy goes pear shaped? Seems to me the risk always returns to the local economy.

    I’d sleep better if I thought the RBA had answers to these questions, however I suspect they’re also kinda clueless.

    • China Bob – hopefully can help here, this is the way I understand it
      a US issued bond fully hedged ? I presume you are talking about a USD denominated bond issued by our banks to raise funds and the bank (issuer of bond) maintains that it is fully hedged. So in answer to your questions:
      Who are the counter-parties to this hedge? FX and Interest Rate hedge counter parties will be other financial intermediaries (most likely the syndicated investment banks that underwrote the bond issuance). Those intermediaries then breakdown the exposure into smaller parcels and pass to their clients eg. Hedge Funds, Sovereign wealth Funds, Life insurance companies etc. BUT the initial hedge party will be another financial intermediary eg. Citi / Morgan Stanley.
      Why are these counter parties willing to take on a Risk that’s considered too big for our largest Banks to handle? They are taking a % of the risk. Say the bond issuance is $1bn then that hedge exposure is split up, eg. morgan stanley takes USD 150mm and passes to its client base. The rest of the exposure is picked up by other investment banks (most likely other syndicated investment banks)
      For what magnitude of exchange rate shift will these counter-parties remain solvent? (hint google LTCM) The thing about hedges is that they are generally in derivative form (as you allude to) and are typically contracts for difference regardless of their form. Thus it is absolutely crucial they are margined in the correct way with daily settlement. Part of the reason why LTCM presented such a problem was the exposure was poorly margined eg. poor quality collateral not valued correctly and not settled on a timely basis such as daily. Some of the counterparts to LTCM could not value their derivative exposure correctly and were not daily settling the difference in exposures. All of a sudden 3 days down the track you find yourself in hock to LTCM for billions. Thus if you have good quality collateral and margin changes are settled daily without any issues then your credit losses on the derivative position should be materially contained. Its the beauty of the “prime Broker” model where the investment bank advancing leverage has control over the hedge fund’s assets. Possession being 9/10ths and all that.
      How do these Counter parties manage this risk? They manage it like a pool of exposures. The hedge counter party is an investment bank passing it onto their client base, ie. broken down and parcelled out. I guess you are getting at who ends up with the end exposure. So for a USD denominated exposure the bond issuer is FX hedging against a AUD depreciation much like an Australian importer might. There will be plenty of counter parts willing to take that risk for a fee/premium.

      The shorting of equities as a hedge is an act of capital structure arbitrage and you’d only do that if you had the mandate to exploit valuation differences (eg. hedge fund) or if no mandate then you’d only do that if your margin collateral was inferior and concerned that the issuer is about to go bust.
      How would the hedge fund hedge the exposure? Yep with an outright equity short or an equity option. They could also get an OTC credit derivative as well. These are both considered vanilla hedges these days. Exotic derivatives you refer to offer more complicated / referenced payoffs but they themselves are usually hedged by investment banks using a portfolio of vanilla hedges.
      So as an example if you ever bought one of those capital guaranteed investments offering a certain % of upside in an equity index (prevalent last decade) that was an exotic derivative payoff hedge by a portfolio of zero coupon issued bonds (capital g’teed part) plus a series of layered strike call options (% upside part). Investment Banks made huge profits if the equity index reached the % threshold quickly in the life of the investment eg. year 2 of the 10yr life meaning you could bank the option premiums meant for hedging years 2-10 as pure profit.

      So am guessing internally at the RBA they don’t give two shiits as its the market’s problem to solve (IMO that is fair enough to for a proper functioning market)

      Hopefully haven’t misunderstood or taught to suck eggs here

      • Thanks Travis, you’ve given me a few things to think about.
        That said I’m still concerned because
        – Markets don’t function properly when the SHFT
        – In a derivatives market meltdown the options settlement system rewards certain critical parities for behaving like the absolute bastards
        – IMHO it’s naive to believe that this shit storm wont feedback into the Australian Economy with all manner of unpredictable / undesirable outcomes. (I mentioned Death spiral convertibles, because they often crushed companies that were dealing with minor cash-flow problems. Once market opinion changed, the positive feedback effect, practically guaranteed the demise of the company that issued the Convertible. I’m concerned that the continuous “management” of this hedge risk creates something similar to a Death spiral convertible, with all the adverse outcomes that nobody really wanted.
        I know I’m not sounding illogical here…I’m basically trying to red-team my own strategy using Emanuel Derman’s critiques…I know he’s been out of the game for a long time, but this is precisely why I think his risk “big picture” is so interesting. I find that Fx /option traders get so caught up in the mechanics of the trade that they fail to see what would happen if market makers simple stopped making markets.

      • “In a derivatives market meltdown the options settlement system rewards certain critical parities for behaving like the absolute bastards”

        And here we have probably one of the most intrinsic factors of any market e.g. Trust.

        For all the propaganda about competition [ see increasingly hyper over some decades ] being king, when trust evaporates its a key indicator of when – why SHTF. Markets can not function without a certain comfort level of altruism aka trust, synthetic evaluation tools and models to judge this risk have a bad habit of concentrating, distributing, and store potintial of the very risk it seeks to avoid.

        Made even more pronounced when such methodology becomes dominate throughout the players – Grisham’s law of selfishness in an inevitable race to the bottom vs enlightened self intrest.

        Disheveled Marsupial…. something about bondholders historically using military’s as strong arm negotiation tool.

      • The “economy” is not the same thing as the “finances”. The economy is human activities, the way we create value by using our knowledge and talents. Today’s waste of human resources has no place in the cynical world of finance.” – PG Berglund

      • @travis, I’ve been thinking about your reply.
        Just a few thoughts:
        Exotic Derivatives becoming Vanilla

        How would the hedge fund hedge the exposure? Yep with an outright equity short or an equity option. They could also get an OTC credit derivative as well. These are both considered vanilla hedges these days. Exotic derivatives you refer to offer more complicated / referenced payoffs but they themselves are usually hedged by investment banks using a portfolio of vanilla hedges.

        It’s definitely true that the Exotic derivatives of 15 years ago are now considered Vanilla hedges. The tools and understanding of how to synthesis these Hedges from readily available OTC style instruments has exploded in recent years. This makes yesterday’s Exotic derivative into today’s fundamental Financial building blocks, as a result the construction of these financial products is no longer limited to the quant teams of very large investment banks like GS. Today there are many Hedge funds and even Pension funds dabbling in the game. In a way this is good because it adds depth to the market, more market makers, more players, more strategies. Unfortunately most players have the same game plan: Make a little money in stable predictable markets and hedge out all open positions whenever volatility effects the viability. Some players (typically with with very “challenged” balance sheets) restrict themselves to the derivatives volatility plays…it’s kinda a Head’s I win (markets dont explode) and Tails you loose (markets do explode but I’m bankrupt) strategy.
        If we look back at Equity markets of the past we can see exactly this sort of behavior was prevalent in the majority of the major financial crashes. Market makers not making Markets was definitely a big part of the ’87 crash, played a huge role in the 2000 tech wreck and was key to understanding the GFC and 2010 flash crash.
        I wonder what I should expect in from tomorrows Derivatives markets when the SHTF?
        Should the RBA find comfort in the evolution of the Exotic Exchange rate Derivatives into Vanilla options…or should it be more worried?

      • China-Bob – what to expect when the SHTF? More of the same just like last time would be my expectation. Issuer’s / writer’s of these structured derivatives are free to make their own marks when it comes to times of stress ie. when a buyer has the right to put the exotic back to the writer of the exotic. The writer may even say “shove it where it doesn’t shine, I’m not redeeming that regardless what the term sheet says”. Writers of those derivatives will do ANYTHING to fight another day rather go bust. After all its easier to ask for forgiveness than permission in such a scenario. And then you are into the realms of reputational risk, ie. would you rather have e.g. Oaktree (hedgie) as your counterpart or Morgan Stanley ? Morgan Stanley all day long would be my response.
        You are right about the game plan but that’s the 95% confidence interval for you. How many days are we really going to see the extreme events? So yes it becomes a trade off against tail events, but in real life what isn’t ? Walking down the street or flying by aeroplane and not dying takes the same consideration of the odds, its just an order of magnitude differential.
        Its the same game plan anyone employs when they take on some leverage ie. 95% expectation I’ll be able to pay this back. IMHO anyone borrowing to buy a house in this environment has got their confidence interval modelling out of order, more like sub 50% chance of paying it back but that’s another issue altogether.
        As for previous market crashes you are right but can you argue that behaviour is cause or effect? Good subject matter for a discussion over a few beers.

        As for RBA’s concerns I personally think they only need to fear the entire system shutting down if institutions fall over so they should expect to nationalise certain banks to ensure the payment systems is maintained.

      • @travis
        just to be clear My concern is not so much for the banks, we’ve already seen that they’ll get a full Aussie gov’t guarantee if the SHTF.
        My concern is for the rest of the Economy as in the Real world Main Street economy, that’s why I focused on the implications of Laying-Off-the bet…in the case of a Death spiral convertible the issuing company upon experiencing transient cash flow problems can quickly find itself in an existential fight. The positive feedback effect of Bond holders shorting the Equity triggers Debt to Equity provisions in the Bond structure and the whole thing quickly goes sideways.
        I suspect (but I can’t quantify or prove it) that the Hedgies that have the other side of the Exchange-Rate risk for these Aussie Bank bonds are not simply hedging against the Aussie banks but rather against broader Aussie Equity markets. As such Exchange rate volatility could easily trigger large short positions to be established in Australian equities that might possibly even benefit from the movement in the exchange rate. From a Derivative perspective it’s nothing to worry about, it’s just the Market clearing, however IF you’re a senior manager in an affected company you’d have every right to be pissed off that the insanity of Aussie bank borrowings is driving the derivatives market to crush your company and in the process to trigger Debt-to-Equity provisions in your loans.
        That’s what I’m really getting at, maybe the RBA has every right to say : That ain’t my problem! but whose problem is it? In a way it’s just one more way that Australia protects certain industries (read FIRE) and dumps the real costs onto our main street and export industries.

    • Synthetic (etf) investment, synthetic money, synthetic clothes melt at the flame of reality. What happens when counterparty defaults – good question to ask.

  10. On a different note: What was with the Aussie basket-ballers?
    honestly was this the same team that played SO well in the lead up rounds?
    Check out the
    Church of Delly
    all the Boomers replaced with MJ crying, say’s it all!

    • I was going to ask the same about the BMX riders, and just about every other Aussie medal favourite. Bread and Circus results are not there, Hawthorn failed last night and last week, Rugby team bugs the all blacks, SL wipes the floor with Smith and cohorts – revolution can not be far off as the masses swing from the poor entertainment to see the hollowing of the economy continue…..

      • Hawthorn won last week against the Shinboners, they choked against the Deamons the week before. That said, credit where it’s due to Chloe Esposito (pentathlon) and the women’s 7’s, Cath Skinner (shooting), Kyle Chalmers …help me out here….running out of names…..

      • and wobblies just got reamed historically. glad I was on the Pepperjack by 9.

        Edit: Apologies to our private school friends but I am one of those fair-weather rugby fans. I only like the wobblies when they win.

        It’s attractive free-flowing rugby when we win. When we lose it is the turnstiles at the entrance to the stadium.

        When the wobblies are made-love-to in the bottom like tonight, it irritates me a tiny but, but it mortifies our private school “graduates”

        So after working through that thought process, Australia’s private schools should have spent more money. The we wouldn’t be in this situation.

        Conclusion: MOAR FUNDING!!!!!!!!

    • Boomers Basketball
      Pathetic Boomers
      Yep, I was so pumped up at the thought of a USA vs Australia Basketball final and I’m sure they were too. It’ll be hard to gain the composure to rescue a Bronze after this sort of game…here’s hoping they can find what’s needed and defeat Spain.

      • I read the same this morning and IMO the SMH title is, well, pathetic.

        Media hype is the worst that can happen to any sport. They thrived on immediate previous performance as a guarantor of the future performance when Serbia qualified for SF and *everyone* forgot how many titles Serbia (and Yugoslavia, Croatia etc…) held and what they are capable of.

        On the other hand, Ladies were a surprise to loose…

    • They have been doing this for years. Amazing that msm is not persistent but I guess not their role. Only role msm has these days is to serve the 1%. When i see such articles i always think it is some sort of infighting between the 1%. Loot not shared fairly.

  11. “I’ll just work for cash for below minimum wage until I become eligible for social benefits here.”


    Can a white man do that? No. Cash in hand jobs are only given to non-whites. Which makes it even harder for Aussies to get jobs.

    That is why we want net zero immigration.

    And cut work visas by 99%. There are clearly not enough jobs to go around.

    • “Can a white man do that? No. Cash in hand jobs are only given to non-whites. Which makes it even harder for Aussies to get jobs.”

      Yes they can. It has been happening for years in hospitality, agriculture and the construction and trade industries. The difference now is that there is a bigger pool of people competing for these jobs with people willing to underbid each other.
      Added to this is the setupt of businesses, and business models to abuse this. Think 7-11 and Domino’s Pizza.
      So yes, immigration needs to be dealt with, but quit your harping about white Australia. It doesn’t exist, hasn’t for decades, and in no ways assists you when you are putting forward your good points about issues.

      • If a Senator can bring legal action as a “white” man then why is there a burning need to be pc ? We are a predominately white Christian country so why do the majority need to creep around the issues. Your sanctimonious calling out of someone speaking their mind is why we have imbeciles like Hanson and her reptilian cohort in the Senate. I mean, seriously don’t you get it? Sheesh!

      • Malcolm,
        Point taken.
        I did almost add something to that effect myself. Old white guys have been running the show around here for years.
        My admittedly rude response to Jacob was not me attempting to be ‘morally superior’ but to say that the whole white people vs other people thing at the ground level is a distraction from his point that the immigration policy is stuffed.
        Creating an us vs them shit-fight at the street level, where we are quite successfully multi cultural, wastes breath, energy and just leads to resentment.

      • I am not asking for a white AUS policy. Maybe I am an Aboriginal myself.

        The point is there are not enough jobs to go around. That quote is shocking – he is here to work for illegal wages and not pay any income tax at all.

        Most Aussie are 1 step away from being replaced by a 457 visa worker on illegal wages. The LNP will keep replacing 200,000 Aussies per year with cheap illegal labour – a rate aparrently not high enough for the electorate to notice and vote against the LNP.

        The most disgusting thing is that Gillard gave out 125,000 x 457 visas per year! Not even John Howard did that.

      • We are a predominately white Christian country so why do the majority need to creep around the issues.

        Who is this “majority” that “creep” around “issues” and what are those “issues” ? Cuz I usually don’t have to read very far into the Daily Terror nor listen to 2GB for very long to find plenty of “non-PC” content.

        Have you considered that maybe the “majority” _aren’t_ rude arseholes with persecution complexes and that is why those who pander to them are becoming progressively less relevant ?

      • Pls excuse my blunt comment fs. It’s been bugging me all day at work. I don’t usually lose my rag. I’m just a bit over the 457 thingy, but no excuse, my bad. Apologies.

    • I don’t agree Jacob. In my little rural town everyone works for cash. I can’t remember the last time I got a receipt from a tradie. The attitude up here is, if all the big players don’t pay a cent in tax why would we ? Can’t say I have a problem with that.

      • That pretty much sums up the attitude of everyone I know; they’ll pay cash for services. Why the fuck should I fund SloMo’s pissups through paying taxes when multinationals are laughing in my face. Fuck. You.

      • I reckon the GST kicked it all off. Pay cash and we don’t have to worry about that extra 10%. It just gave both sides of the deal a little more incentive. I was in Sydney in those days and distinctly noticed that surprisingly it was now the providers of services (almost all of them) offering me the cash discount rather than the other way ’round.
        Funny, our lords and masters assured us that that particular tax would kill the black economy ;)”

    • Fuck it makes me mad, I paid $60K + in tax last year. $60K, like there was a time when I was a student who didn’t have more than $2 to rub together and $60k was a figure I couldn’t even fathom earning… Now I pay JUST that in tax!

      No wonder the wealthy use negative gearing, because the low income cash only earners and the upper rich and their methods of funneling money abroad untaxed. It seems the middle-class are the suckers. Especially if my tax dollars are paying that blokes “benefits” he so desperately seeks.

      The whole system is rigged. Paying tax is for mugs apparently…..

      • Mining BoganMEMBER

        Another of the reasons I’m dropping out soon. What wage I have left over goes towards paying shitloads of tax on my earnings outside of my job.

        If enough folk do it though the gubmint will probably scream “skills shortage” and increase 457 numbers just to keep things rolling.

        Stuff ’em all. Now watch them confiscate wealth once the SHTF.

      • It’d be nice if all that tax outlay (same story here) did something for me – but no, shitty infrastructure, shitty service from public entities, summarily treated like a slave by courts – you want justice? Let me see what’s in your pockets and scan you first! WTF – police who sweet f#ck all as gangs take over swaths of #Hellbourne. Without a partner or kids I get literally zero “benefits”. So as far as I can see I pay tax for the privilege of being treated like shit…

      • I feel that, though not to that extent. PAYG for the loss. But they will keep asking for more from it as they refuse to make any effective changes and lose a public relations war.

      • @Mig what you talking about? You live in Melbourne the most livable city in the world apparently… ?. Which im sure it is if you live within 15 mins of the cbd and bought a house 15 years ago.

      • Gavin, for you to be payign 60K+ in taxes you have to be on 200K+ (incl super) pay scale. Thats a good wicket you are on. Which industry and what skillset may I ask?

      • I have paid over $80k+ for the last 10 yrs..This year $105k..(.The year that blew my gasket..I removed myself from my industry ) What do we receive..? SF All…I HATE tax time…

      • @Virus – I’m in IT, online marketing and measurement. I guess Web Analyst would be the best description. Dealing with things like “Big Data” which is a superfluous term like “the cloud”. I’ve been doing this job for nearly 8 years now. I’m somewhat over it, but I was hoping being frugal and waiting for the bubble pop would pay off and put me in a good position, instead I continue to get screwed. ;).

        I only realised how much tax I was paying this week as I’m putting together paperwork for my accountant, who will no doubt tell me I’m an idiot for not being negatively geared and I’m somewhat inclined to agree with him at this point. ;).

        Not sure if I’m on 200K, but with super, yearly bonus, equity/options etc.. I am probably closer to 170-180k.

      • @Donna not that it’s any consolation, but I feel your pain. It wouldn’t feel so bad if capital gains and land was taxed like PAYG was, instead we have a distorted system that encourages land speculation and loop holes via Super funds. Then you have the cash economy types who avoid paying their fair share.

        It seems the ATO has no teeth, wish they were more like the IRS and would smash those rorting the system.

      • IT also, software dev/dev ops. Last 5 years I had saved my employer $2mil per annum in licence fees now I save $10mil pa. Cost to them? $210k clawed back by govt? $100k

      • There is certainly a fine symphony of tiny violins playing in the background at the moment.

      • @DrSmithy yes I know it’s all a bit of self loathing. *Sigh*. I should probably avoid airing frustration on MB. 🙂

      • Glad you enjoy smithy, you’re amazing contributions besides they probably won’t be here long – then all you’ll hear is the sound of a left hand clapping…

      • S is one of the dumbest characters you will ever come across, honestly believes reality has a left bias – as if reality is politically biased!! Dumb as a box of rocks

      • @DrSmithy yes I know it’s all a bit of self loathing. *Sigh*. I should probably avoid airing frustration on MB.

        Nothing wrong with being frustrated, nor talking about it. But direct towards the right places.

      • Well I’d love to have that tax problem, but I can certainly understand the frustration you voiced in response to a comment of mine last week about how it was frustrating that being in a top tax bracket you couldn’t buy property in the area of Sydney you mentioned (presumably you can but with a stupidly large amount of debt) . If you can’t (and I think I remember you saying you were single, no kids, or was that Mig?) then what hope do the rest of us have? Absolutely none it sounds like. I’ll be single, no kids and if I can get your tax bill as my income in my first couple of years back in Oz I’ll consider that a major bloody victory considering the way things sound in Oz these days, if I can buy something in Tasmania I’d be joyous. That’s the other thing that is unfair, it sounds like single people are basically locked out of the market. What happens to those of us who either don’t want to partner up or just don’t find someone?

      • @Popcod no kids yet, live with my long term partner and we have discussed having kids etc.. I’m priced out in the sense that I don’t want to take out a lifetime of debt just to call a place home. Not going to assume I’ll be earning this wage forever and not going to assume both of us will be working full time forever either!

        I don’t just worry about me, I worry about my brothers and sisters who don’t earn the wage I do and what they will do. At least apartments might crash and become cheaper for single folks. But at $700K + in Sydney it’s absurd.

    • haroldus, may be you got the same marketing email from BetaShares like I did.
      FOOD sounds lucrative, infact, I was recently digging around to see how I can get exposure to global agribusinesses. However, could not find FOOD on CommSec. It is listed on ASX but somehow not available on CommSec! Might email BetaShares directly.

      The only downside would be that it will be highly illiquid but that should not be a problem for me as I am looking for long-hold and some income (distributions)

      • thanks yeah I got the email

        remember the whole BHP buying fertiliser mines thing? that’s when global agriculture got my attention.

        I do love the idea of intensive indoor agriculture in a nerdy way, also even love the idea of algae cakes filled with omega 3. probably the only human on that planet that does.

    • Good find. iShares also have a global healthcare (incl Oz) ETF that I’m in. That agricultural one looks very interesting.

  12. For mig…. sweet dreams….

    Texas sorority video compared to ‘gates of hell’

    No doubt the enthusiastic members of Alpha Delta Pi at the University of Texas at Austin hoped that their new recruitment video would earn them a bit of attention.

    Boy, has it.

    New York magazine warns that “this sorority video will haunt you for years to come.”

    It’s just 39 seconds long. But according to Twitter critics, that’s 39 seconds of their lives they wish they could get back.


    Disheveled Marsupial…. back in my old days they were known as “virgin vaults”…. strangely tho’ upon being invited in…. in was more a case of Monty Pythons Holy Grail castle Anthrax…. 0ou..

      • You need to get out more skip, if Twatters see evil in every corner then seriously, they’re sad. All I saw a bunch of young women doing benign American preppy shit. Seriously, if Twattisphere think’s that’s the down fall of civilisation then it’s them who has the problem.

      • Wing Nut…

        Do you have any experience with the American collegiate Greek system i.e. I think part of the group think over some time is grounded in elite schooling, due to network effects. Some lament the same kinda effects in GPS down under.

        Disheveled Marsupial…. especially when money has more to do with it [parents] than more academic reasons….

      • They seem fond of high jinks like strapping naked young men to shopping carts and leaving them stealthily in the foyer early in the AM…. true story…

  13. “But under new laws introduced in Victoria this week, anyone wanting to change the sex descriptor on their birth registration and certificate will be able to do so without so much fuss.

    Descriptors under the new laws include the traditional options of male and female, and now also specify a gender diverse or non-binary descriptor.

    The reforms will have significant implications for transgender children and teens, especially those who have been refused admission to schools because their gender did not match their birth certificate.”

    What planet am I living on?


    • with a tiny bit of reflection gina’s right.

      these medals SHOULD be called the Rinehart Gold in honour of the fierce individualism and refusal to accept teh public teat displayed by our rugged loners lined up for medals.

    • I saw and read that too…. Quite amazing…. I am not outright bearish on most metals, just Iron Ore.

      • The chart in that article that shows ‘demand diversifies’ about steel consumption is bullshit. It says the figures are Percentage Change (YoY). It’s bullshit in the SMH/Age article and it’s bullshit in the Bloomberg article it was lifted copied and pasted from. In 2015, China produced something like 49.6% of world steel and consumed about 44.8%. Total world consumption was ~1.5Bt. That means ex-China steel consumption was something like 828Mt in 2015 and the chart implies it will increase to more than 1 Billion tonnes in 2017 (+30%). Nope.

        It looks better in this article from finsia.com where the same data appears but it has a Y-axis (correctly!) labelled as million tonnes, not % YoY. The chart is titled ‘Exhibit 5 – Annual Change in Steel Consumption’.

        We can confirm it’s bullshit because in this report from worldsteel.org (where I got the earlier figures from) we can see the actual change in world apparent steel consumption for 2011 was +104.5Mt, 2012 was +28.3Mt, 2013 was +90.5Mt etc. These figures match the Exhibit 5 chart.

        So, the net change (minus some from China and plus some from ex-China) for 2017 is something like +23Mt, not +23% (~350Mt!). Units matter, labels matter.

        #FAIL The Age, SMH and Bloomberg.

      • Good spot David, like I said, some metals I am not bearish on, but Iron Ore I am bearish. And screwing up the axis labels like that is terrible.

      • It all boils down to a choice. You want to be a wage slave or you don’t. It’s always the same story: young couple with baby, father with a decent professional income. Both his boss and his banker go to sleep with massive erections knowing that they are now the masters of this man’s destiny.

        Well that, or you’ve got loads of daddy’s invented currency ex. China to launder.

      • @ Tony. So true, my boss (who I actually have to thank for keeping me out of the wage slave situation) used to joke that an employee with a wife, kid and mortgage are the best and better still if they had ex wife with kid and now wife and baby!

      • Dunno Bogan, could be too tempting to use it! Strayan politics – it’s beautiful

        “But Jackson, who helped amplify the crisis around Thomson, was harbouring some secrets of her own. As the Federal Court decision on Wednesday shows, for many years she had been systematically stealing from the HSU including on a lavish personal lifestyle.

        The judgment by Richard Tracey is largely symbolic as Jackson, in her latest move to avoid justice, declared bankruptcy just before her civil trial was to begin in July.”


      • I really don’t get the wage slave thing. What makes you think that all people hate being on a wage? Or that all people hate going to a nine to five job?

      • Mining BoganMEMBER

        Jackson eh? It’s truly amazing that the only people in the land who didn’t know she was dirty was the MSM.

        Who was it won a Walkley about the Thompson story? She was told about Jackson and still chose to ignore it. I know where my gun would be pointed.

      • Of course LNP.

        Not for everyone though. There’s millions of people that vote for LNP to do exactly what LNP are doing. Taking from you and me and giving it to themselves and rich people.

    • How utterly depressing when someone like me earning 160k+ and has a 500k deposit with help from mum thinking buying at current prices is not possible without a lifetime of debt servitude or even multi generational mortgage. Something must be wrong, very wrong. I can only think there is massive wide scale fraud going on…

      • Couldn’t agree more. I have comparable deposit but earn significantly less than you. Just recently had to go through process of re-applying for my permanent job (gov’t) & now I have that assurity (if you can call it that) I find prices have jumped in last few months. Even though I could buy, I don’t fancy having a mortgage till my mid 70’s for a modest house/ townhouse. It’s either move out of Sydney or wait for a correction for me (come on S Keen predictions!)

      • Only problem with Steve Keen is that people think he’s a loopy idiot and a chicken little. I’ve known people telling me the property bubble was meant to pop 15 years ago, blah blah blah and look at it now etc..

        Sad thing is they are right… I just hope some day Keen is…

      • What am I defending? I’m against negative gearing, half capital gains tax, uncurtailed immigration and 457 visas, foreign investment without land tax, I’d be all for a vacancy / land tax, capital gains tax (remove the exemption for PPOR).

        But I feel totally powerless to change the current system. I voted against it last election and it was a close election but we still have liberals in charge. I’m just being more pragmatic, in that if you can’t beat them join them. Because at the current rate soon I’ll be without an asset and by virtue of that a second class citizen in this country.

      • Whats this thing you call citizen Gavin… there are no citizens in the market place… only consumers…

      • Something must be wrong, very wrong. I can only think there is massive wide scale fraud going on…

        Nup. ‘Tis all legal.

    • St JacquesMEMBER

      What an amazing bloke. I’m usually loathe to use this expression, but truly, he is inspiring. They should be required to to provide him with that office instead of forcing him to park in the veg zone for whatever time he has left. Go Goodall !

  14. So, in Ryan Lochte the International Olympic Committee finally has its poster boy. Nothing says “IOC, bitch!” like landing in a host city, extracting personal glory from it, partying it up and then leaving the place more broken and out of pocket than you found it

    Can’t make this shit up – so it’s not a barely adult douchebag acting as such – it’s WHITE PRIVILEGE and EXTRACTING PERSONAL GLORY. As if Brazil isn’t white….

    Several sharks were jumped at Guardian HQ


  15. “Was it mere luck? Mr. Adams considered the possibility but concluded after further observation that it was a matter of sophisticated technique. On his Dilbert.com blog, he started analyzing Mr. Trump’s tactics through what he calls the “Master Persuader filter.”

    Mr. Adams is something of a self-taught expert in persuasion theory and technique. In his 20s he took a course in hypnosis, and during his corporate career he attended seminars and read books on negotiation, communication, marketing and sales. He familiarized himself with the academic study of persuasion, in fields such as social psychology and behavioral economics.

    The central insight of these disciplines, Mr. Adams says, is that “people are never rational. They rationalize. So after the fact they tell you why they did something. And there’s plenty of science to support that. Now we can show that people actually make their decision before they come up with their reasons. . . . That was the perspective that I took when I saw Trump.””


    • “Abstract: Conflation of real capital with finance capital is at the heart of current misunderstandings of economic crisis and recession. We ground this distinction in the classical analysis of rent and the difference between productive and unproductive credit. We then apply it to current conditions, in which household credit — especially mortgage credit — is the premier form of unproductive credit. This is supported by an institutional analysis of postwar U.S. development and a review of quantitative empirical research across many countries. Finally, we discuss contemporary consequences of the financial sector’s malformation and overdevelopment.”


      And just for you skip

      Free To Choose: The Original 1980 TV Series
      Free To Choose® is the ground-breaking PBS television series featuring Milton Friedman” ??


      • I just finished the Hudson piece.
        It’s familiar ground but one of the best structured articles that I’ve read on this topic.

    • Sorry Mig… I don’t give obvious persons of criminal pasts and equally pathological tendency the time on day… rots the mind to give them any gravitas… Buchanan hearings, NAIRU, ALEC, share holder value trope, monetarist, and enabler of the financial sector as we know it to day…

      “Although he passed away in 2006, states are now grappling with many of the toxic notions left behind by University of Chicago economist Milton Friedman.

      In her groundbreaking book, The Shock Doctrine, Naomi Klein coined the term “disaster capitalism” for the rapid-fire corporate re-engineering of societies still reeling from shock. The master of disaster? Privatization and free market guru Milton Friedman. Friedman advised governments in economic crisis to follow strict austerity measures, combining radical cuts in social services with the full-scale privatization of their more lucrative assets. Many countries in Latin America auctioned off everything standing — from energy and water utilities to Social Security — to for profit multinational firms, crushing unions and other dissenters along the way.

      Now, U.S. states are in crisis. The 2008 Wall Street financial meltdown, caused by years of deregulation and lack of government oversight, cost Americans $14 trillion in lost wealth and eight million lost jobs. Today some 25 million are unemployed or underemployed. This jobs crisis has tanked federal and state tax receipts, adding billions to state budget shortfalls.

      As the prime movers of this deregulatory agenda, the GOP spin machine has launched into hyper-drive in an attempt to wash the blood from their hands. Governors across the nation, backed by Wall Street’s Club for Growth and the Koch Brother’s Americans for Prosperity, are working hard to convince average Americans that a jobs crisis is actually a deficit crisis and that the culprits are not the big banks on Wall Street, but state, county and municipal workers.”


      Disheveled Marsupial…. you seem confused mig…

      • You think PBS is public broadcasting mig – ????

        Disheveled Marsupial…. that’s like saying the public restrooms in the foyer of a big multinational is “public” mig. You must remember corporatism was in full swing at the time, Milton was a key neoliberal author and architect of that ideological charge….. now your soaking in it…

    • DESPITE the best efforts of the banks and regulators, the flood of Chinese money into Australian residential property doesn’t seem to be showing signs of slowing — yet.

      … news.com.au is branching out into comedy

      • Branching out? I believe you mean succumb to management style. Ever seen @rupertmurdochs tweets? The fish rots from the head *cough* hall

    • Good Lord…There are women like this ? Still..?!! Makes me want to run screaming for the hills…I have obviously wasted my life in the heat, red dirt, black dirt and underground…pluk..shoulda just married a Farmer or a Real Estate Agent from the start and sipped “Chardy” from a bucket..

      • Hmm….How else would you get through a marriage like that? To “earn” your “pay/pocket money”…To earn your benjamins by being married to a Politician…would take some serious pharmaceuticals….

  16. From Tax Justice Network’s August 19 Taxcast.

    The Big Four accountancy firms: Are they in fact more like the ‘Big One’? And should they be broken up? Also: the Duke of Westminster’s 9 billion tax free inheritance and how his family history forms the legal basis for the justification of tax avoidance around the world; why are the world’s biggest banks now officially endorsing transparency measures? And…so much for Panama cleaning up its act post-Panama Papers scandal: we discuss the demise of Panama’s not-so-transparent Transparency Commission.

    “The Big Four…just seem to be getting away with being the guardians of commerce when they are basically a bunch of tax cheating facilitators…they have infiltrated governments at every level all around the world” —Michael West

    “What they’re doing is really taking over the operation of companies by stealth…4 organisations dominating 98% of global commerce as auditors is well past its used by date, I don’t think any industry has come even close to this…” —George Rozvany

    Featuring: John Christensen of the Tax Justice Network, tax ethicist George Rozvany (with 32 years of experience at senior levels of Big 4 Accounting Firms and major corporations) and award winning economics and finance journalist Michael West.


    Disheveled Marsupial…. and some think taxis are a rentier cartel… sigh…

    • Like many young Chinese homebuyers, he got help from his parents to buy his first property – a flat nearby he acquired in 2014 – but said he had to finance the new house himself.
      ‘I have to work very hard to hopefully get a big house, that’s my dream. I hope it comes true,’ he said, adding that he also planned to keep the flat as an investment.

      So he bought a flat in 2014 with help from mum and dad, 2 years later buys a 1.8M home he financed himself? What kind of deposit do you need? $400K+ and he earned that in 2 years through “working very hard” I suppose….

      It’s a joke, come here to get a degree, get permanent residency and then funnel mum and dad’s money into as much Aussie RE as you can..

    • What a fking joke. Love the word too (apoplectic). Thanks.

      I’m apoplectic. I’m fking apoplectic.