Links 4 March 2020

Global Macro / Markets / Investing:





Leith van Onselen


    • Nah, great excuse for moar oppression, Xi has already used it to strengthen himself politically. Though in the long run it will hasten their fall of CCP as more people are going to be pissed of, assuming people can overcome tech surveillance, first sign of trouble likely people on the streets.

    • Unlikely. China will resume business as usual, stimulus will be gargantuan – atonement and compact with the people courtesy CCP.

      Meanwhile the US will continue to botch its virus response. Community spread will overwhelm a disfunctional medical system. The heady mix of first world and third world will be laid bare.

      (Assuming a second (or continuing) round of infections does not take place in China as China returns to work.)

  1. “I am done.” A Manus Island security guard took her own life. Her suicide note was addressed to Scott Morrison.

    A former security guard left severely traumatised by the deadly riots at the Manus Island detention centre has taken her own life before her legal battle with the Australian government and G4S Australia reaches court – after writing a suicide note addressed to the Prime Minister.

    • I was desperate for a job a few years back and had a chance meeting with an old friend who was working security on Manus/Narau, offered me a full time gig no questions asked, great money, good roster. Had to decline outright as I knew it’d be a terrible situation. I chose to stay poor for another 2 months before finding a job that wouldn’t give me PTSD. Take from this what you will.

      • You’re not an idiot and actually have some morals, plus you have the ability to make rational decisions in your long-term favour by turning down short-term benefits despite significant discomfort at the time of needing to make said decision. Well done, lack of idiocy, having morals and self-discipline combined with real world intelligence are in short supply these days. Now all you need is luck and you should be able to change your MB name!

        • Sticking to my morals has cost me dearly, both financially and personally, but I have always said it means I can sleep at night. Unfortunately last night had some terrible insomnia and was lurking MB until the early hours. Made for a rough day today and negated my moral matnra.

  2. NEW ZEALAND … CORONAVIRUS … Allowing the economic ‘shock absorbers’ to work …

    Finance Minister Grant Robertson expects coronavirus to hit NZ harder than previously thought, but still prefers ‘sector-specific, region-specific’ government interventions to tax cuts and helicopter money … Jenee Tibshraeny … Interest Co NZ

    During 2019 New Zealand’s new dwelling approvals were about 7.66 per 1000 population per annum (37.5k) and rising … Australia 6.71 and weakening (about 172k) … and California a truly woeful 2.75 (about 110k)

    Adjusted for population … during 2019, Australia new dwelling approvals were about 87% of New Zealand’s, while California was about 35% of New Zealand’s new dwelling approval rate.

    No wonder that within the latest New Zealand ANZ Bank Business Confidence Survey, construction is the most positive sector within the economy …

    Coronavirus hits business confidence; Agricultural sector’s confidence dives while construction sector’s lifts … Jenee Tibshraeny … Interest Co NZ

    There is enormous scope to substantially ramp up more affordable new housing production, as an economic ‘shock absorber’ by dealing expeditiously and effectively with land supply and proper debt financing of infrastructure (click on my name above for further extensive background information).

  3. Whoa. Something really strange just happened simultaneously to both FTSE and DJIA. Right on 0200 AEST, both just spiked upwards a lot.

    Looks as suspicious as the Chinese coronavirus numbers. Guess they warned short sellers they would defend the economy.

    OK. Fed reserve announced a 0.5% rate cut.

    But may not help much at this point. Within 15 minutes the sudden gains had been erased and index back in negative territory.

    • The poo just spiked too. RBA cuts and the fvcking poo is up over a cent now. Fvck me dead.

      • Fox and the Hound

        Now that I think of it, it’s odd that the general position of MB users is that the RBA is screwing savers by sending interest rates to zero, but at the same time, we really want the AUD to lose all its purchasing power ASAP.

    • Capitalism experiencing its end game. Aided and abetted by the half-wits at the FED and US Govt. Which is appropriate.

      The cut actually SPOOKED investors (and rightly so)

      Market is tanking as a result.

      Difficult times ahead. We have definitely reached the peak.

      Read Wolfgang Streek.

      • capitalism is just experiencing initial period of new era
        it’s democracy that is experiencing its end game

    • Trigger Finger

      Consider this – companies are going to be completely insolvent, even bankrupt and their share prices remain in the stratosphere.

      The stock market is now a function of Quantitative Easing – not value.

      Money is poured into the economy by the government – it is borrowed at zero or even negative interest rates – sweeeet – used to buy stocks drive up share prices – take early retirement on the back of meeting performance targets.

      Borrow money on negative rates – sweeet – buy companies, load them with debt, HUGE DEBT – asset strip them to repay that debt, fire staff, etc – collapse that company bankrupt on debt – who cares because its zero debt anyway.

      Borrow money zero interest – sweeeeeet – buy up state utilities drive them into the ground with zero maintenance have state buy them back at maximum price – swwwwwwwwwwwweeeeet !!

      Walk away on tunnelling projects – why not – free money. Walk away on stadium rebuilds – when not free money.

      Best bit – banks roll all this leveraged debt into tranches and sell it to Japanese pension funds as LDO (leveraged debt obligations) as ultra secure debt.

      All these companies have far lowering earnings than they did during the GFC – yet have six times the debt pile – a 1% increase will wipe out half of them.



      • How sweet it is….
        Being quick on the trigger doesn’t always hit the target but you really nailed it today.

      • Money is poured NOT into the economy by the government but into insolvent businesses – economy is dying despite the money

        only way for this to work is to include stock-market volumes directly into the GDP

        • The Traveling Wilbur

          You are more than welcome.

          Damn Fed though. Damn US Treasuries. 50bps… did not see that coming. Would have been nice to have been in a little longer after all to get some of that movement.

        • I’m sorry you’re all out of bonds TTW.

          Don’t worry. It’s better to mourn a bit of opportunity cost than it is to nurse cash losses.

          • The Traveling Wilbur

            PS Can you / anyone explain how cutting the cash rate helps fight economic impacts of a virus outbreak? Makes coffin financing cheaper? Huh?

          • TTW, I don’t know what the last 3% of rate cuts in Australia were for. If you ask me it’s just about house prices. Davo and Leitho disagree and seem to think that our manufacturing is about to rebound and go on a tear, or something.

            The US cuts – those are a bit different in my book. US has stuff other than housing, still. But I do find it hard to believe that being able to borrow 0.5% cheaper is the salve to anything much, except awesome asset price inflation in DCF models.

          • Arthur Schopenhauer

            It’s all about house prices. If house prices are high, people buy paint, is the thinking. The last couple of weeks at have revealed how little manufacturing we have left. Its obscene what has been allowed to happen. And most of the people posting trades on this site have no idea how dire it is.
            The cuts have done nothing for industrial capacity, the old fashioned measure of an economy’s strength.

  4. It is a pity that more voters don’t understand the damage done to the economy by right wing monetary policies over the last 25-30 years. If they did they would understand why they are receiving little or no income on their “savings”……though calling unsecured at call investments in fraudulent private banks “savings” is more than a little perverse.

    Interest rates are low because the conservative government and the RBA are obsessed with trying to run the economy on ever expanding private bank debt and manipulating interests lower and lower is how they maintain demand for more private bank debt even as household levels of debt have risen skywards.

    And by now everyone should know what that debt has been applied to. Rather than expanding productive investment in new economic capacity it has been used to bid up the prices of residential land and mostly in a few capital cities.

    Now we have households loaded up with debt and petrified as their wages stagnate, assuming they are able to hold onto their jobs as the Liberal and National parties flood the country with cheap labour or export jobs in Free Trade Agreements with our trade rivals.

    We have the economy that the Quiet Australians voted for so you should make the most of your debt inflated house prices as that is all there is left.

    Especially if you have been demanding that the RBA cut interest rates.

    • The Traveling Wilbur

      Keep ’em a little bit scared, very dependent, well fed and dumb.

      Well, that last one takes care of itself mostly.

    • After all these years, I’m convinced that you are the only one on this site who understands what has led us to this demise.
      You could have added that governments do not have the means or the intent to pay down their debt.
      Perhaps the days of affluent mindlessness are finally over.

      • Cheers Athlone,

        Once you understand that what should be a democratically exercised public money power has been turned into a public /private cartel that has been captured by the private the rest is fairly straight forward.

        It is a clever scam because it insists that the “public” still controls it but as we can see RBA independence really just means independent of the public interest and free to pursue the interests of its true stakeholders ….the management and shareholders of the private banks.

    • while this is true it quite narrow
      if you step back you’ll see that we are just following global trends
      prior to this, left wing fiscal policies were “printing” money and generating inflation and none was happy about it despite almost full employment and rising wages (why people were unhappy is beyond me, especially why those with debt – who cares what IR is when wage is growing 10% or 15% per year)

      but GDP growth at the back of government “printing” money was being subdued by inflation (GDP deflator) so right wing monetarists figured out how game the performance measure and to make GDP growth bigger despite slower growth (reduce GDP deflator by not giving money to the people to spend on stuff but rather force them to give that new credit money to the banks)
      initially they were pouring money into stock (via forced or voluntary retirement systems they introduced) than after it saturated they had to go for property – the only other big thing not taking part in CPI calculations (and GDP deflator).

      while everyone agrees that inflating GDP by making milk more expensive is not fair because same amount of milk is being produced and traded, none is questioning this when it comes to housing. More expensive housing leads to higher GDP because part of GDP being generated by real estate gets deflated by CPI not by house prices. If we build same number of homes and price doubles GDP contribution of the sector will double (minus CPI)

      Imagine who would our real GDP growth be over last 20 years if house prices (cost of shelter that constitutes 30% of all costs) were included into CPI and GDP deflator?
      this just shows how fictitious GDP is as a measure of economic growth

      • DoctorX,

        The issue is always about whether public money creation is productive. The Japanese achieved a mostly productive creation process before and post WW2 by using private banks with targeted industry mandates and with loan quotas. That meant that government had broad control over the exercise of the public money creation power but not specific lending control.

        The USA, Germans and many others including China have achieved mostly productive results using a variety of similar methods of managing credit creation by banks. The Anglo obsession with deregulating credit creation has resulted in the large amounts of unproductive credit creation and asset price bubbles of the last 40 years. Greed plus Cold War fears have caused much harm.

        I am not enthusiastic about too much centralised control as those who control the levers have tendency to sociopathic personalities, nice uniforms and a penchant for military gear. The USA post WW2 is a good example but there are plenty of others including the axis powers pre WW2.

        I think a better approach is more public money creation by the public but injected at the bottom of the economy. Trickle up economics in other words.

        A combination of essential government services,
        Little or no tax on low income earners. People working for charities already have tax free thresholds of $30K that should be extended to all taxpayers.
        Direct monetisation of part of the fiscal deficit
        Access to central bank deposit accounts for all citizens (they will pay no interest)
        Most lending by pure intermediaries that are private though I have no objection to public lending agencies operating on an intermediary basis.

    • Wellie considering your past affiliation with the Chicago school pft I find your befuddlement about it all curious. neoliberalism was never about old timey Adams like economics, purely a two class system built on financial paper – did Greenspan’s era go unnoticed or the Chicago boyz antics too your dog.

      I mean did your dog not see the Junk [tm] Science being peddled decades ago – ?????

      • Please pft your on the record and MB archives do tell, but its not like Sweeper and myself have pulled you up on dishonesty in the past.

        That is what was sooooo funnie about mig popping up last night to fling the boomer meme out whilst the markets have dramas. Sorry but … boomers as an agency, aside, markets currant state is the results of decades of wonky ideology about social organization dressed up as economics. One can easily go back to say Bhopal or Exxon Valdez and see how corporatist judiciary views reconciled such events, all fleshed out with walmartification, increased consolidation in the market and PE antics.

        Yes its a big enchilada decades in the making and all front run by a pack of ideologues on some oligarchs [rich guy in America – lol] payday. Seems the only rub is now the chickens are coming home to roost and some thought that treatment was just for the lower races or their home of origin and not the good folks at home – silly buggers …

        Fat fingering and whitewashing [tm] of history is going to be epic methinks ….

        PS … rhetorical framing and bending reality aside, I and others IMO disagree with your groups fundamental axioms and how they are arrived at … the rest is pig wrestling …

        • You and Sweeping pulling me up?

          So many LOLs

          You really do live in a fantasy world.

          Half the time Sweeper insists banks are nothing special and the other half he wants to nationalise them all.

          As for you – you can’t help telling us about your long standing family links to banking. I don’t blame you for personal bias but you try and pretend it is not a thing.

  5. Fishing72MEMBER

    And here it comes……

    “Earlier, Premier Daniel Andrews said there was every reason to believe the current containment strategy would end as the virus began spreading within the local community.“

    • Oh good, Melbourne Uni and Monash Uni have been waiting for this. Their “students” are ready and willing to buy apartments and Dan wants this.

    • Huge fail by government not closing the borders. Every new case is another bed in hospital quarantine and as they also try to track hundreds of potential contacts. We might still be able to stop it and allow the Aussie economy to be the least affected in the world, but no they have an open border policy, which will cost lives & most likely lead to a bigger economic impact than shutting the borders! They are literally sacrificing peoples lives to have a bigger recession! Will the Australian public hold politicians accountable.

      The party that said they have strong borders & will decide who comes here need to remember that rhetoric can work both ways.

      • bolstroodMEMBER

        Who is going to burn for whom ?
        My letter in the SMH yesterday was vetted.

        Homayoun Kheyri, Australian Iranian cell biologist and science editor for Iran International, rightly calls out the Iranian government for refusing to act on the Coorona Virus. (SMH 2/3/ 2020)
        What then would he think of the Australian Government , which has put a travel ban on people coming from Iran, but refuses to put a similar ban on people coming from other infected countries like South Korea and Italy?

        this bit was left out
        (Minister Dutton interviewed on ABC Insiders on Sunday was asked this question but prevaricated and would not commit to such bans.
        This leaves the Australian population exposed to thousands of potential carriers of the Virus.)

    • Dan really wants those students back because he just can’t get enough of sucking Chinese c0ck.

  6. blindjusticeMEMBER

    Following the severe acute respiratory syndrome coronavirus (SARS‐CoV) and Middle East respiratory syndrome coronavirus (MERS‐CoV), another highly pathogenic coronavirus named SARS‐CoV‐2 (previously known as 2019‐nCoV) emerged in December 2019 in Wuhan, China, and rapidly spreads around the world. This virus shares highly homological sequence with SARS‐CoV, and causes acute, highly lethal pneumonia (COVID‐19) with clinical symptoms similar to those reported for SARS‐CoV and MERS‐CoV. The most characteristic symptom of COVID‐19 patients is respiratory distress, and most of the patients admitted to the intensive care could not breathe spontaneously. Additionally, some COVID‐19 patients also showed neurologic signs such as headache, nausea and vomiting. Increasing evidence shows that coronavriruses are not always confined to the respiratory tract and that they may also invade the central nervous system inducing neurological diseases. The infection of SARS‐CoV has been reported in the brains from both patients and experimental animals, where the brainstem was heavily infected. Furthermore, some coronaviruses have been demonstrated able to spread via a synapse‐connected route to the medullary cardiorespiratory center from the mechano‐ and chemoreceptors in the lung and lower respiratory airways. In light of the high similarity between SARS‐CoV and SARS‐CoV2, it is quite likely that the potential invasion of SARS‐CoV2 is partially responsible for the acute respiratory failure of COVID‐19 patients. Awareness of this will have important guiding significance for the prevention and treatment of the SARS‐CoV‐2‐induced respiratory failure.

    • NSW jumps from 4 to 15 cases in a week. Looks like we won’t need to wait until winter for the Sydney to #racooncity transition.

      • Roughly 4 times greater each week, 4 -> 15 -> 60 -> 240 -> 960 -> 3840 -> 15360 -> 61440 -> 245760 is 8 weeks progress …

        • Thanks! As various YouTube channels tellme at the moment we’re linear creatures we don’t instinctively get exponential increase, which is what new disease outbreaks do

          • bolstroodMEMBER

            Yeah we don’t do exponential well.
            Take the Climate Catastrophe, most people ,politicians included think that 2 degrees planetary increase above pre industrial levels
            will be twice as bad as 1 degree.
            Not so. 1.2 degrees will be twice as bad as 1degree, and so on.
            Same for population increase.Debt you name it.
            We seem to be exponential everything these days.

  7. Poor Fellow My Country

    Returning to my theme of India’s amazing luck with the coronavirus with Sweden as a compactor.

    Yesterday the score was India 6 cases, Sweden 15

    How did we go overnight?

    Sweden now has 30 cases. Not unexpected given the growth rates in cases outside China.

    And India? Still only 6 cases!!

    To which I say: pack of lying CVNTS.

  8. Arthur Schopenhauer

    Played in the local Tennis comp last night and asked what everyone thought about Corona. Answer: its just the flu. 😐
    It’s easy to forget how few people think about more than what’s happening next week.

    • And your follow up was no doubt:
      “I’m glad you see sense because I’m feeling a bit under the weather and I thought you might want me quarantined from the match” ( holds hand out to shake after the toss!)

    • I really think it depends on what media people consume. A lot of people will get their news from just one paper, and if the opinion column writer says it’s just the flu, then that’s their stance on the issue.

  9. Arthur Schopenhauer

    “ An Iranian lawmaker reportedly has told colleagues to stop their contact with public as there are 23 cases of the new coronavirus among parliament members.”

    This included one who downplayed the virus before falling ill. Think about that Dan.

  10. Think some around here should read up on historical cases of epidemics through out human history, seasons and time are the two factors which determine outcomes – covid-19 is mild in historical comparison.

    The biggest outcome of all this is exposing the weakness of the so called free market economy for what it is, due to being tightly coupled, JIT, and managerial incentives. I mean Trump having a hard time understanding industry [tm] leaders informing him in a face to face that a vaccination is a year + out rather than a few months is a huge tell. But you’ll get that from a guy that enjoyed the sea that lifted all boats in C/RE and golf club – resorts for the financial elites.

    Lmmao leather couches I bought last time started in Germany, went to Italy and then China before arriving in Australia. Lets not even talk about the billions blown on MIC in America for stuff that will never work, but is key for various political parties to keep in power for votes. All whilst selling off or down sizing government outside disbursement of funds to the private sector ….

    • The biggest outcome of all this is exposing the weakness of the so called free market economy for what it is, due to being tightly coupled, JIT, and managerial incentives.

      Identical to what Chris Martenson has been saying for years. He also explains other weaknesses of the modern economic model.

      Keep reading. You have more to learn Skippy.

      • Ugh … I was of this view before the GFC, you know when all the traveling ideological tent revivalists were selling “democracy and free markets” globally. In Australia’s case in the late 90’s, on prime time TV, wanking on about the ignorance of the cultural tall poppy syndrome E.g. we should applaud rich successful people and emulate to become them – Übermensch homo economicus rational agents …

        Not folly for Chris or anything like that, sticking to MMT PK and the platform represented by Sanders.

        Hate to tell you but I’m over 35 years into all this, have experience in T1 [know socially more than a few BSD] , let alone academic and conferring with others internationally from an econ – history stance. If I wanted to go back to some church of thought, I’ll find some tiny church and sit quietly on a pew.

  11. blindjusticeMEMBER

    We will miss ‘cheap’ Chinese goods

    Not the first time this kind of thing has happened:
    The driver airbag deployed but failed to prevent the driver’s head from striking the steering wheel. Steering column components were a potential source of injury for the driver’s knees. The passenger’s airbag deployed but, near the peak of the crash, the seat belt retractor failed allowing the seat belt webbing to reel out and the airbag could not prevent the passenger’s head from striking the dash
    (in the pdf technical report)

    and we rush to do free trade with countries with sub standards such as those, no wonder we`re all going to get the bat soup fever. This morning has a glazier company on saying they were reducing output because their glass came from china. WTF. We cant make glass here? That sounds so stone age to me.

    • I have a mate who job it is to test the steal coming in from china
      basically designed to last less than 10 yrs I think he said.

        • The Traveling Wilbur

          I love unintentional puns.
          Well done 8mill
          And those who observe them.
          Well done bolstrood.
          Well done Wilbs.

          • The Traveling Wilbur

            My apologies for the delay.

            To strikeout text you don’t like you put one tag at the start of the text and one tag at the end, e.g.:

            <strike>text to strikeout</strike>

            Which results in the following when displayed in a comment:

            text to strikeout

        • The Traveling Wilbur

          My apologies for the delay, and for responding to the wrong comment!

          To strikeout text you don’t like you put one tag at the start of the text and one tag at the end, e.g.:

          <strike>text to strikeout</strike>

          Which results in the following when displayed in a comment:

          text to strikeout

          • bolstroodMEMBER

            Thanks wilb, i will give it a go.
            Lockins rule , in these strange day’s.
            Mb comments is a valuable community resource.