Links 2 July 2020

Global Macro / Markets / Investing:

Americas:

Europe:

Asia:

Trans-Tasman:

Leith van Onselen

Comments

    • I listened to a real vision interview with Kyle Bass yesterday. According to his interpretation of the world Chinaneeds USD badly (and of course with trade falling off a cliff isn’t even getting it’s usual amt) and one way they’re trying to get it is through the belt and road projects. Hadn’t thought of it like that before. Anyway super interesting times

      • Combined with stories of ~ 2 banks/week blowing up & their further slowing of outbound monies…. more dots leading to something going on……

      • The loans to build the infrastructure require payment in USD while all inputs are chinese paid for in RMB. Net flow is USD into China.

        Tails I win, heads you lose.

  1. NEW ZEALAND: MAY BUILDING CONSENTS … MORE AFFORDABLE CANTERBURY POWERS AHEAD …

    Consents for 3554 new homes were issued in May, the highest number since May last year … Greg Ninness … Interest Co NZ

    https://www.interest.co.nz/property/105816/consents-3554-new-homes-were-issued-may-highest-number-may-last-year

    The number of new dwelling consents being issued has recovered strongly post-lockdown but commercial building consents remain low, according to the latest Statistics NZ figures. …

    … The increase in new consents was particularly strong in Canterbury where 667 consents were issued in May which was up 50.2% on May last year (the interactive chart below shows the trend for new dwelling consents in all regions). … read more via hyperlink above …
    .
    .
    Building consents issued: May 2020

    https://www.stats.govt.nz/information-releases/building-consents-issued-may-2020

  2. New Zealand accused of failing to stand up to bully China, as Beijing passes Hong Kong security law … Thomas Manch … Stuff NZ

    https://www.stuff.co.nz/national/politics/122004663/new-zealand-accused-of-failing-to-stand-up-to-bully-china-as-beijing-passes-hong-kong-security-law

    A former leading diplomat says New Zealand is failing to stand up to a bullying China, as the Government promises to “closely monitor” Beijing’s use of a security law imposed on Hong Kong. … read more via hyperlink above …

    • Pfh007.MEMBER

      It is a pity that she does not deal with the obvious problem having acknowledged that bond sales by the government are a subsidy to the rich.

      “.. The purpose of selling the bonds is to drain off the reserves, the dollars, to remove some of the dollars the government has spent into the economy and replace them with treasuries. It’s a subsidy to the rich, is what it is. .”

      The government does NOT seek to drain off reserves with bond sales for the fun of it.

      If Kelton wants to stop subsidies to the rich she needs to explain how the current banking / monetary system will operate without ‘draining off the reserves” using treasuries.

      Draining off reserves and manipulating the interbank rate on borrowing reserves is how the central bank manipulates interest rates across the board.

      An obvious partial solution is to allow the general public to operate deposit (Reserve) accounts at the central bank as that will create significant demand for additional central bank liabilities but your banking mates will hate that as they currently enjoy a monopoly on central bank accounts.

      Until Kelton starts talking about the ‘revolution’ she is proposing your finance/banking buddies will continue to attack her.

      Tell us again how banks are just “tools” and have no agenda.

      • It is a pity that she does not deal with the obvious problem having acknowledged that bond sales by the government are a subsidy to the rich

        but everything governments do is subsidy to the rich, including welfare and public education … all of these things help rich more than anyone else

        • Pfh007.MEMBER

          Could you flesh that out a bit?
          I am speculating as to where you are heading but probably best if you explain what you mean.

          • the original purpose of welfare was to prevent hunger driven revolutions while public education to ensure indoctrination and provide childminding for factory workers

          • Pfh007.MEMBER

            I thought that is what you may have been alluding to.

            The problem with that analysis is that it assumes that without those things there actually would have been a revolution.
            We can see plenty of examples around the planet where welfare and education have not been extended to the working classes and guess what?

            The rich are doing quite fine.

            But getting back to my original comment in context, I assume you don’t disagree with my observation that Kelton and other MMT folks who identify that bonds are a subsidy to the rich need to describe in detail how the monetary system will operate if those tools of rich folk subsidy are no longer available.

            If they don’t do that then MMT is actually recommending an expansion of the subsidy to the rich (use of bonds) because that is exactly what will be the outcome of expanded fiscal deficits.

      • http://neweconomicperspectives.org/2012/08/wall-streets-war-against-the-cities-why-bondholders-cant-and-shouldnt-be-paid.html#more-3106

        http://neweconomicperspectives.org/2020/01/alternative-paths-to-mmt.html

        Can you please use references when making claims and then reverse engineer everything to fit the manufactured accusation Pft. You and DrX just stepped off into the void of your own making and then compound error by concocting some off the cuff altered reality simulation. Just the claim that MMT is a pro rentier outfit is absurd when Austrians and fake Keynesians are funded by them, along with fundie Marxists all hate MMT.

        BTW Pft I’ve got no dramas with making banks public utilities and offer savings at public post offices.

    • Pfh007.MEMBER

      “..We were so sure that Premier Dan had asserted his leadership and had got through to everyone with those clear unambiguous messages. “Just stay home.” It should be appearing on a T-shirt soon – large white letters on your choice of 100 per cent pure cotton ethically sourced and sweat-shop free jet-black Tees, all sizes and shapes catered for – his, hers and theirs. With 10 per cent going to subsidise a renewable energy start-up powering sustainable community housing for stranded foreign students whose broken bicycles are preventing them from delivering the most amazing coconut water and kombucha cocktails with gluten-free kale-burger sliders…”

      So much chortle, snigger, head thunk!

  3. Robodebt Mk II

    https://www.theguardian.com/australia-news/2020/jul/02/tax-office-sole-traders-jobkeeper-not-entitled-payments

    Small business owners who have relied on jobkeeper for income throughout the coronavirus pandemic have had future payments suspended by the tax office and warned they may have to pay back what they have received.

    The Australian Taxation Office’s “compliance” checking procedure affects sole traders who started their businesses after 1 January this year.

    Affected businesses, many of which have received the $1,500 a fortnight wage subsidy since May, have been sent an email from the ATO within the last week warning that because they “started business on or after 1 January 2020”, their “entity would not have assessable business income” from the 2018-19 financial year, and therefore could not prove the 30% reduction in revenue required to access jobkeeper.

    However, the ATO’s website describes how businesses started after 1 January are eligible for jobkeeper, outlining an alternative test for proving a reduction in revenue, by comparing the average monthly turnover in February with turnover in following months.

    Since the compliance emails, which have been seen by the Guardian, were sent, affected sole traders have complained on the ATO’s online forum about the threat of having to repay money.