Links 18 November 2019

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Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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  1. Iranian Protesters Set Fire to the Central Bank of Iran After Fuel Price Rise

    hah, only because petrol went up – petrol is only a tiny % of all costs
    imagine what would they burn if some large costs go up, costs like housing …
    unfortunately the regime there is too soft so these hooligans may get what they want, that cannot happen here, none is allowed to distract traffic, to disobey police directions or assault a police horse

  2. CHINA / HONG KONG … Interest Co NZ this morning …

    https://www.interest.co.nz/news/102610/giant-saudi-ipo-launched-trade-war-phase-one-deal-limps-ahead-us-gdp-growth-evaporates

    … extract …

    … In China, new data out for October shows that house price growth is now falling away in most Chinese cities. Officially, they are “stabilising” but in many more cities we are noticing small declines, and that includes for Beijing.

    In Hong Kong, official data shows a sharp turn in their economy, and into recession. For all of 2019 they expect their economy to shrink -1.1%, but for the September quarter it shrank at a rate of more than -3% pa. New street violence has flared again overnight, and the Government is threatening its employees who support the protests, and indication of how widespread the support is for the demonstrators, who can still bring tens of thousands on to the streets. … view & read more via hyperlink above …

    http://www.stats.gov.cn/tjsj/zxfb/201911/t20191115_1709560.html

    • We are just following the Turkish example

      https://wolfstreet.com/2019/11/17/as-bad-loans-explode-in-turkey-government-tries-to-recreate-debt-fueled-boom-that-let-to-its-financial-currency-crisis/

      The whole world has just had a high rise building boom mainly and as it rolls over the bailing out begins…..I suspect the US repo madness might be the credit lines the big banks extended to the shadow mortgage banks who funded their high rise boom being bailed out using the sponsored repo system.

      How they think they can repeat the 70’s to inflate the debt away without centralised wage fixing is beyond me.

      • Deputy CEO Senar Akkuş, during a recent earnings call, blamed weak demand for new loans as one of the main reasons behind the increase in the bank’s NPLs, since weaker credit growth renders the portion of soured loans relatively larger when compared to total loans,

        openly saying ponzi doesn’t work because there are now enough new people entering the scheme – one must appreciate the honesty of people in these countries

        ruling elites are not aware that in the current environment of weak government and deregulation deflation combined with huge debt is going to destroy world economy and cause age of revolutions (mounted police is not going to help). even negative interest rates don’t help when wage deflation is rampant and credit principals are high

  3. Investment in housing makes a lot of sense. Even a 2 % net rental return is better than bonds or TDS and even equities. Potential downside is also probably less than the other investments except for cash – but hey inflation should take care of that. Add in the population ponzi, laundering of Chinese money and favourable tax treatment by our intellectually corrupt and inept politicians and it’s a perfect brew.
    Millions of people can’t be wrong. Join them and buy, buy buy!!!!!

  4. U.S. Mortgage Rates Rise …

    US long-term mortgage rates rise; 30-year at 3.75% … AP

    https://apnews.com/1c4bbc2472244caba337cc1cbc9b674d

    U.S Mortgage Rates Rise as Sentiment towards the Economy Improves … Yahoo Finance

    https://finance.yahoo.com/news/u-mortgage-rates-rise-sentiment-010453160.html

    Rising Mortgage Rates Can Sink the U.S. Housing Market … CCN

    https://www.ccn.com/rising-mortgage-rates-can-sink-us-housing-market/

  5. ” HOUSES AND HOLES

    There’s a meme that our economy is just houses and holes – i.e. real estate and mining.

    I’ve always thought that was unfair to a lot of good businesses in our economy – we do food manufacturing brilliantly, pharmaceuticals are a booming export category, we have a huge healthcare sector and education is one of our biggest export earners.

    But the latest admission from the RBA is there’s more truth to that meme than they thought. And they should know. Real estate really is a major component of our economy.

    And that’s disconcerting news for anyone hoping we can find a sweet spot where the economy grows healthily but house prices stay sane.”
    https://www.news.com.au/finance/economy/interest-rates/disconcerting-news-damning-line-found-in-rba-report/news-story/4fa78d55d28758fdb0f62020c8026e42

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