Links 7 November 2019

Global Macro / Markets / Investing:






Unconventional Economist


  1. Kingsgate Consolidated is arbitrating with Thailand under the Thai Australia free trade agreement. According to articles published in the Thai press it is seeking 36-40 billion baht compensation for the expropriation of its gold mine.

    • Profits are a function of exploitation, information asymmetry and power imbalances. If capitalism worked the way it was supposed to there would be no profits. Discuss.

      • Yeah, but the word ‘exploit’ has a benign meaning, not malign is often interpreted

        /ɪkˈsplɔɪt,ɛkˈsplɔɪt/ – make full use of and derive benefit from (a resource).

        “If capitalism worked the way it was supposed to there would be no profits. Discuss.”

        In no way known would there be no profit, capitalism is meant to make profit. Foregone consumption by way of surplus is newly formed capital, it ‘works’ by then generating a profit, the resulting profit is the definition.

        Model capitalism means no extraordinary profit, or economic rents. Even with perfect power and information, there will be some profit.

        Does anyone receive royalties for things like The wheel? The table?


    How California Became America’s Housing Market Nightmare … Noah Buhayar and Christopher Cannon … Bloomberg

    California, the land of golden dreams, has become America’s worst housing nightmare.

    Recent wildfires have only heightened the stakes for a state that can’t seem to build enough new homes.

    The median price for a house now tops $600,000, more than twice the national level. The state has four of the country’s five most expensive residential markets—Silicon Valley, San Francisco, Orange County and San Diego. (Los Angeles is seventh.) The poverty rate, when adjusted for the cost of living, is the worst in the nation. California accounts for 12% of the U.S. population, but a quarter of its homeless population. … read more via hyperlink above …
    4 out of 5 Americans say there is a housing affordability crisis (NAHB Survey) … Mortgage Professionals of America Magazine

    Trump pushing for crackdown on homeless camps in California – NZ Herald

  3. The ghost college story seems to be predicated on the fantasy that none of the “students” were complicit in the scam. Let me guess. The next story on the ABC site is “Why are wages falling? We may never know”.

  4. It’s going to be interesting to hear just why this Russian builders labrourer allegedly stabbed an Apartment developer and his son.
    makes one wonder if maybe finances are a bit tight, maybe the wage packet came in a little on the light side, or maybe there’s just no longer enough money available to pay to be “protected” , given those involved all kinds of things are possible.
    I had my own irrational Russian experience many years ago…all that I can say about it is that if a Russian believes you’ve cheated them than you’d better find an honorable face saving solution to the problem and find the solution before he finds you.

    • I am sure it had to do with cash flow and unpaid invoices. As I said yesterday on the arvo comments, I think it is a tragic turn of events and worrying given where the apartment sector (and economy) is headed.

      Pretty much every residential development site in Sydney would be in strife, with evaporating pre sales and lenders not keen to throw good money after bad.

      If that developer had been doing serial projects and kicked off this one expecting post construction sales from the last development to help fund progress payments (as many do), well no prizes for guessing how that would turn out.

      Not to mention trying to go and beg for mezzanine finance on an in-progress site at the moment – you would be looking at interest rates inversely proportional to the RBA cash rate even if you had someone prepared to lend to you.