Links 15 January 2020

Global Macro / Markets / Investing:






Leith van Onselen
Latest posts by Leith van Onselen (see all)


  1. I have just come back from having Singha beer on the beach in Thailand and thought of all your reply comments to me, You are all in “Bubble Denial” it’s so easy to see from outside looking in and REUSA is right about one thing, you are a bunch of commies that are relying on “The State” to bail us out

    There will be a new movie made about AUSTRALIA 2020

    “The Great Australian Short”, the biggest bubble to ever burst

    • texas is building so much yet prices doubled since GFC?
      california has a shortage yet house prices only doubled since GFC?

      must be some other force behind …
      texans lost faith in oil stocks, so they are speculation on houses … while californians who speculate on IT stocks waste money on properties …

      • If you care about people you would want no shortage of decent housing. In other words you want all people to have decent housing.

        Here is a test for all the high IQ readers out there:

        What is the best way to determine the extent of a shortage of decent housing in a given area?
        1) The number of people missing-out on decent housing
        2) The change in house prices over the last few years

        • yeah shortage, we have “chronic shortage” because there are 1.5m empty homes and every year we build almost 100k more empty homes

          • Nonsense.

            At any given time a few percent of houses will be empty for a variety of reasons – tenants just moved out, renovations, just been sold, awaiting development approval, etc. Therefore most of your so-called empty houses are only empty in the short-term.

            If indeed there is a large number of houses that are empty on a long-term basis, then this is a disgrace and is clearly adding to the shortage that so many Australians are suffering from.

            Genuine empty houses are a potential partial solution to the shortage problem. All they need is powerful laws to force them into use. What powerful laws are YOU proposing?

      • Lies damn lies and statistics
        New supply is one reason the median home price in Texas is currently $207,301, while in California, it’s nearly triple that, $605,280

        maybe Texas prices have doubled as you say but the current median price is still $207K …I’d suggest based on my observations that at least half the increase in Texas housing price has to do with the house size / fit-out of the average house having dramatically increased costs over the last decade.
        As I said lies damn lies and statistics.

        • while we were about lies let’s consider this:
          median home value in California varies between $509.4k and $605.3k, in texas from $207.1k to $245.3k – none knows but to prove point one takes smallest from one set and largest from the other set

          none is disputing that californian house prices are in bubble but same is brewing in texas, and supply may not affect that at all

          so if an average Texas annual supply of around 140k new homes in last decade (1.4m new homes since 2010) in texas was enough to keep prices affordable why around on average 200k of new homes built annually in Australia (1.9m since 2010) wasn’t enough to achieve the same?
          since 2010 texas population grew by 4.2 million while ours grew by 3.2 million

          *Australia builds 1.9 mil new homes for 3.2 mil new residents and that’s constrained supply that drives prices up
          *Texas builds 1.4 mil new homes for 4.2 mil new residents and that’s large supply making homes affordable

          btw in same period california built only around 800k new homes for 2.6m new residents but had plenty of inventory from a decade before when they built so much

          so this idea that house prices grow fast because of constrained supply is just gibberish, for decades we are building more than almost any place in the world and yet have more expensive homes than almost any place in the world

          • Actual housing inventory has nothing to do with Housing price because the primary driver of housing prices is the expectation that housing prices will increase.
            In Texas few people have this expectation they look up and down the road and see just how quickly new demand is satisfied by new Supply and they know that house prices simply can’t double anytime soon (like for like comparisons) . What is happening however is the up-scaling of houses, in part this is driven by changing life styles and in part it’s a response to where the newer houses are being built. If you look at houses south of the main ring road I635 you’ll see lots of heavily treed lots with smaller houses and a more traditional yard. If you look at newer developments say Frisco and west Plano (both north of Dallas) you see lots of McMansions with a pool and maybe a small tree or two in the front yard, back yards are largely non-existent, so sub 1/4 acre lots with 400sqm homes are not at all unusual these days but just to be clear this is the product that Texas buyers want.
            They want this indoor space, they want their home theater, they want their over sized 6 car garage/ project work-space, so that’s what they’re buying
            I think a lot of this “choice” information gets lost in the statistics, so making further inferences about price changes across multiple different markets makes absolutely no sense.
            If I buy a $250K house in Texas on a 3% 30 year mortgage I can easily pay this off with a total income of $75K so they buy a house with the intention of paying it off whereas in California they buy a house with the intention of selling it in 20 years for a huge profit. Different markets different motivations different outcomes

          • An expensive housing market in shortage attracts a different demographic to a cheap housing market in abundance.

            Texas housing is abundant and cheap and so is very attractive to large families with mothers who do not work full time.
            By contrast Australian housing is expensive and few can afford a large family. Birth rates confirm this.

            Shortage-deniers like you try to make things so complicated by searching-out statistics that can be twisted to support your wrong opinions. It doesn’t have to be that hard.

            Can a single person on minimum wage easily rent a small unit?
            Can an ordinary family on ordinary incomes afford at ordinary house?

            These are the simple statistics you need to figure out if these is a shortage, not your sophistry.

          • @fisho

            In Texas few people have this expectation they look up and down the road and see just how quickly new demand is satisfied by new Supply and they know that house prices simply can’t double anytime soon (like for like comparisons) .

            I agree with you but why people in Sydney don’t see the same thing when they look down the road with 1000 units under construction? Why people in Sydney think unit prices will double in 7 years when so many are being built constantly?

            My original point is that supply has nothing to do with price growth under bubble condition. It’s just speculative confidence (driving force) combined with easy credit (enabling force). Everything else is almost irrelevant

            House prices in Texas did marginally rise because of the size but also because of change in mentality. 15 years ago when people were going crazy about house prices in other parts of USA Texans were still licking woulds from Enron collapse and investing heavily in oil shares (everyone has his own greedy obsession). Now they are starting to “invest” in housing, firstly as a small renovation/rebuild option but more and more as a pure asset gamble. They are just lucky they are going of low start but if this continues for another 10 years it’s going to become California style property speculation obsession (texans had their own craze in 80s (despite the same supply flexibility) but didn’t last long enough to push prices to california levels)

          • I think it is simple.
            No Texan thinks that they will get knocked back for any reasonable residential housing project anywhere in the state of Texas. You can add to this that there is no expectation of construction labour scarcity (when there’s plenty of work there always plenty of Mexicans )
            by contrast no Aussie with any experience believes that they’ll get approval to build a house without jumping through a thousand hoops and providing unspecified favors to the Mayor / Council Planning authorities.
            Maybe there’s no good basis for believing that Australian councils won’t support residential redevelopment but anecdotes certainly suggests that it is much more difficult to get building approval in Australia than in Texas. Price is a function of scarcity and approval scarcity is the worst kind of scarcity, curiously it’s also the type of scarcity that is most often associated with corruption….but corruption is so unaustralian …yeah

  2. truthisfashionable

    How good is the start to 2020..
    One quarter of working aussies likely had no pay over the ‘end of year forced closures’ (myself included… yay contracting!)

    Sydney water have deployed stockings to filter the soot and ash from the dam water

    Our Glorious Grocery Duopoly are flagging that vegetable prices *may* rise by 50%

    Whilst our toxic mega cities now try to kill our sporting visitors

    I know I feel confident about the year, maybe I should meet with a mortgage broker.

  3. Regarding ‘the coolest robots at CES’:

    Really? A plastic cat with drawn eyes the size of the head of a normal live cat?

    A slow pair of disembodied robot arms doing a sh*t job at … well, everything? I mean, really, how can you fvck up dropping a coffee capsule in a coffee maker? And just ignore it and go and press the lid down anyway? Is it going to say ‘oh! Fvck!’ when the lid doesn’t seal properly and hot water pïsses everywhere? …

    Oh, and coolness of the cools, a yellow ball of a personal assistant! Really? is that a personal assistant for up-skirt pictures? How is it going to deal with dog tūrds?…

    … but hey, don’t despair, we’ve got a toilet roll fetcher! Hallelujah, our problems are solved… the only question that remains to be solved is, how is it going to get the paper roll from behind that closed door, and up on the highest shelf… If only we had another robot to replenish the first robot….

    FMD… we really are fvcked as a species. That asteroid can’t come quick enough!

        • I see this as a potential focus point of a new boom.

          First a boom in the robots. Then a boom in vantablack bikeshorts and vantablack panties.

      • Not that I’m skeptical, per se – although, I am – but I honestly cannot see the point of *any* of that shìt… none of it! Why? What about maintenance? Firmware updates? Bits and pieces breaking? Again, WHY?! It’s fvcking hard enough to get whìte goods repaired as it stands today… this!? The logistics of *anything* like this mass produced will be monstrous. To what end? WHY?

        I think all this is just PR stunting, get advertising click bait going, get the marketing dept stats up. But scratch the thin veneer of bvllshit, and even the ideas they’re putting forward are just dead-ends…

    • Don’t worry. We’re importing house elves by the thousands. Soon there’ll be house elves willing to do these robot tasks for next to nothing.

    Oh how the once mighty have fallen.
    I have so much respect for Boeing but with each round of disclosure I’m just left shaking my head and muttering, that would never of happened in Boeing pre 2000.
    It just wouldn’t have happened because at least one of the Fellows on their Technical ladder would have put their foot down and simply said. I’m not signing off on this.
    From what I’ve been told, that’s all it would have taken and it would have happened. Boeing Sales and Management respected their Technical staff and would have never pressured them to sign-off on something that wasn’t safe. As a company technical excellence was how Boeing differentiated themselves from their lesser rivals like McDonnell Douglas. F’ups like MD11 undersized tail and aft center of gravity just wouldn’t have gotten past the drawing board. that’s why Boeing’s products sold for a premium and MD products were all severely discounted just to get the customer to sign-up.
    In the end it looks like MD’s culture one out and the world is all the worse off for this.

    • I’m very disappointed by it too. Boeing used to be the Rolls Royce of plane makers. The 747 was a magnificent achievment. Still flying after 50 years.

      I don’t approve of govt killing people but I suspect we would have had a better result if Trump had used his drone to kill Muilenburg instead of that Iranian dude.

  5. After a dominant performance by Australia in the ODI last night against India, I went to the mumbai news and read the comments in the article about the game. Funnily enough, it was no different to reading comments in SMH/The Aus if the situation was reversed (india thrashing Australia here).

    India only playing well against shit teams, (insert battsman) can only play against shit teams etc. etc.

    Maybe we’re not that different after all


      “Non-authorised deposit-taking institutions (non-ADIs) are lenders that do not take deposits from the general public and are therefore not subject to oversight by the Australian Prudential Regulation Authority (APRA).”
      No accident or oversight here-built for purpose for the ‘mates’ amidst applause and clinking champagne glasses.