Macro Afternoon

See the latest Australian dollar analysis here:

Macro Morning

Asian share markets were largely down across the region, although Australian stocks have rallied against expectations, with this sentiment shift also changing as European bourses open. This maybe due to a lack of any type of lead from a closed Wall Street tonight because of the Labor Day long weekend. Bitcoin continues to trip and fall, down below $10000 briefly while gold continues to decelerate into weekly support just above the $1930USD per ounce level:

In mainland China, the Shanghai Composite is down nearly 2% to close at 3292 points while in Hong Kong the Hang Seng Index is off 0.5% to be at 24482 points. Japanese stock markets are doing about the same with the Nikkei 225 finishing 0.5% lower at 23089 points as the USDJPY pair lifts slightly without much momentum above the 106 handle:

The ASX200 was the standout, gaining nearly 0.3% in a vain attempt to plug Friday’s big loss, starting the week at 5944 points while the Australian dollar went nowhere, hovering just below the 73 handle:

Eurostoxx futures are indicating a small gain on the open while with Wall Street closed it seems it all hinges on mood changing significantly soon as the S&P500 four hourly chart indicates a lack of buying support here as we all wait for the BTFD crowd to move in:

Given the Labor Day weekend holiday, the economic calendar is pretty empty tonight with German industrial production for July the only release of note.

 

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Comments

  1. GunnamattaMEMBER

    On Dan Andrews and his route out of lockdown
    I think Andrews is 100% correct that if the COVID19 virus gets loose again then further lockdowns will ensue, therefore this lockdown needs to work.

    I think that Andrews is 100% correct that lifting the existing lockdown without transmission considerably reduced from where it is will only see a further spike in virus numbers.

    I completely agree with the sense that public commitment to the existing lockdown is starting to fray, and that reinstituting another lockdown down the track may prove to not be a goer.

    On the other hand I also tend to agree that the social and economic costs – jobs included – are both humungous and stretching people to breaking point.

    The response
    But the distinction within our community is this……

    On the one hand there is a very large percentage of people – certainly a majority – who do what they are asked, find the lockdown response plausible enough, and wear the hassle and the stress of whatever is required, and work on the idea that our elected politicians and authorities are working to both limit the possibility of the virus being communicated to the most at risk, and bearing in mind the economic consequences of this.

    On the other hand we have a small minority of people who assume that the government plan as embodied thus far is some sort attempt to do something – ranging from a plan to take over the world and assume dictatorial powers in the name of the elites through to some sort of policy to bankrupt business and throw people onto the streets or out of their houses – and who want to protest that.

    About those protesting about their ‘freedoms’ and in favour of ‘let it rip’ – they are arguing an economic case in favour of the 1%ers
    Now at the moment someone needs to start telling people of a couple of things.

    The first is that weighting the community response towards the ‘let it rip’ or ‘it’s only a batch of old people who are sick already who are dying of this virus, is fairly explicitly prioritising the focus on the economic cost of addressing a medical condition – all else needs to be considered in the context of the economic cost to our current economy. We live in an age where all else has been considered in the context of the same. But that status quo is all about the 1% and the banking and finance world. The moment that has a cardiac arrest – see 2008 – of course we could envisage trillion dollar responses. But anything else – health, education, infrastructure, social welfare etc – ‘oh, that’s too expensive’ or ‘we don’t have the money’ or ‘nice to have but it’s a lower priority than (GDP in some guise).

    The line about the economic cost being too great to address COVID effectively is just another form of the same one which will come back next week or next month or next year – Lower taxes, and small government being the imperative of the day – which will be blame apportionment for health conditions. Diabetics have caused their own problems (by eating too much and not getting enough exercise), lung cancer sufferers shouldn’t have smoked all those years, heart attack risks reflect individuals who didn’t choose a healthy lifestyle, etc etc etc – the economic cost of ‘carrying’ these people is completely out of proportion to ‘contribution’ they will make, and the ‘impact’ of the higher taxes will be XYZ – so someone will float the idea of simply telling these people ‘you are on your own’ – and we can mosey down the path of a US style health system.

    Australia has been living in an economic bubble for a long time, and it was bound to pop eventually
    The other major point to make – to those noting economic costs and jobs in particular (here is looking at the Federal LNP and large Australian business in particular, but the whole political economy at state and federal level more generally, and almost all Australian business other than those businesses which either export, value add and sell into a global market, or provide services into a global market) is this. Almost the entire Australian economy is a bubble.

    That bubble has been cultivated over the course of a generation by policy enacted by both sides of politics (though mainly conservative Federally) and it means that any experience outside that framework of that bubble entails considerable economic cost and imperils jobs. That bubble means that there are very few Australians (let alone Australian businesses) which are in any way viable upon exposure to the ‘real world’ or any form of real ‘marketplace’. Our people are amongst the most expensive on the planet, our energy costs are the most expensive on the planet, as are our educations costs and land costs. This has been deliberate policy.

    That deliberate policy was based on the assumption that the world we knew less than a year ago – free capital movement, open borders, vast amounts of bullshido (not to mention fraud, corruption, and glib speciousness), ever falling interest rates and ever greater debt – would go on forever, and that nothing would or could conceivably endanger the paradigm.

    Economic Pants down means ‘opening up’ to COVID19 without nailing it or vaccine

    = (equals)

    Return to Population Ponzi, flatlining incomes, expensive energy, tax cuts for corporate & ‘elites’, and almost certainly more spiralling houses, bullshit jobs, corruption, energy gouging, sanctimonious ‘business’ types warbling on about ‘workplace flexibility’ while pocketing million dollar bonuses – and even then it will fail

    Well COVID19 has, as a result, caught Australia (and numerous other nations) and Australians (along with many other nations, but few as spectacularly as Australians) with its economic pants around its ankles.

    In this context the ‘open up’ or ‘let it rip’ mindset is an investment in the economic palsy which most of us have experienced for more than a decade. An investment in wage stagnation, in Population Ponzi, more debt, and the economic take going to the 1%, and Australia’s larger corporates harvesting the extra GDP demand made real by flooding the country with immigration to generate population growth. And that has all those running a ‘civil rights’ line effectively arguing (protesting, demonstrating) in the favour of the interests of the big end of town.

    That mindset, which has run this country for a generation, will be itching for ‘let it rip’ – it wont be getting the virus, and if ever it does it will be quite capable of affording the finest care money can buy. That mindset isn’t in an aged care facility staffed by a handful of temporary visa employees, sharing the PPE gear.

    That mindset, right at this moment is wondering to itself if maybe the government has been a bit generous with the JobKeeper – despite ample evidence that taxpayers are funding corporate profits, dividends, and sabbaticals for professionals, who can get their accountant to structure their finances appropriately as much as sustaining households – and thinking to itself that if COVID19 can generate that sort of largesse in extremis for an event which happens every 100 years then maybe government can be a bit smaller. And just about all of those small business people complaining most bitterly – well they are living off that bubble too. And they will be right up there with the first in line to threaten temper tantrums if they cant make workplaces more ‘flexible’ or if they cant import foreign students to undercut the wages they would otherwise pay to you.

    The economic road ahead
    Next time you hear Prime Minister Morrison, or Treasurer Frydenburg, or one of the heads of the banks, maybe Innes Willox or Jennifer Westacott, warning about the budget or the jobs consequences of a further lockdown, or the economic impact of the virus on Australia, there is a question you should ask yourself, or your friends, or hope to be asked of those eminent persons….(though it won’t be because Australian journalists don’t go there). The next time you hear these people hear these people warbling on about ‘sacrifices will have to be made’ or warning about the dire consequences for ‘future generations’ ask yourself what sacrifices they (or their members) are making and what their actions tell you about their commitment to future generations.

    What is Australia’s current economic strategy? Does it have one? or maybe even Is the economic strategy from here to recreate the economy we had 9 months ago? Or Is it to create a competitive Australian economy which delivers meaningful quality of life for Australians?

    And then think about whatever it is these people do say through the prism of that same pair of questions – are they just on about recreating the old, the flawed, the failed? The parsimonious, the faux markets, the glib speciousness, the entitled? The dismissal of any views but theirs? Or are they on about something better? Something ordinary Australians might be proud to pass onto their kids, and work towards making happen? Are they talking from the view of ‘lifters & leaners?’ or Unquestionable entitlement? Or are they leading by example?

    Personally I think a better COVID 19 outcome would be governments of all levels identifying overtly that………
    1. Something like the above is what Australians have been through
    2. COVID19 has brought an end to that era
    3. A new range of economic policies will rapidly be put in place to address the above

    That will not be pain free
    Yes that will generate losers (particularly in the short term) though extensive government support will mitigate that to some extent, but the priority in that mitigation will need to be people, and not assets. So in this sense I would imagine that Australians with a mortgage on a lived in family home to the value of X (maybe 500-750k) will get better protection than property speculator types with ‘portfolios worth millions’ who are leveraged to the gills. In the same way I would imagine that business relying on Australians to go ever deeper into debt, or harvesting demand of an ever increasing population base, may need to revisit their models, and that Australian businesses which are economically competitive and selling services or products into a global or open market will be afforded a more positive hearing by policymakers and politicians than they have had in a generation. Australian employers nailing incomes to the floor in meaningless dead end jobs can take a back seat to those investing in and utilizing Australians and their skills to meaningfully compete.

    ….but the old economy is dead and all the tax cuts in the world wont bring it back
    If it requires a longer lockdown to sheet home to all economic actors that the old economic regime had a touch of the zombies about it, and that we need something new in an economic policy sense, then so be it. Never let a crisis go to waste was the great NeoLiberal mantra.

    Now is the time to shove that deep into the great beneficiaries of that era. Do not let out politicians or our ‘elites’ off lightly. Because the far greater threat to ‘freedom is not Dan Andrews asking everyone to stay off the streets for a spell while a virus is about, but about what our ‘elites’ will think they can do.

      • And it’s not about the economy or lives or any of this nonsense, if we don’t have a modern economy we won’t be able to save lives longer term – so I just see us sacrificing everything on this last hurrah where the boomers live longest and bestest and it all slides down – like it already has on every other metric vs the boomers. For crying out we have a govt that pats itself on the back for assisted euthanasia and locks down 5 million people so no-one dies from covid. It’s not bloody rational and it’s not bloody science – science was tracing all our cases back to quarantine failure! FFS

          • What you posted was very early numbers and a few preliminary studies and then used them to buttress your ideological projections. So far it seems your only focused on mortality rates and completely unfazed by the mounting evidence of long term morbidity in a significant percent of the population. Worst bit is the term herd immunity, clearly its not what you think it is and that suggests you don’t understand the terrain to begin with.

            Science does not use watery terms like liberty or freedoms, mashing it together is a bad case of Scientism, sorta like transferring metaphor’s from maths and physics to people.

            Its really not hard to understand just the social psychological risk with the let it rip policy E.g. same or worse result with more death due to lack of knowledge at this moment.

          • Suspect the “long term” effects of this virus that has been around les than a year will be less prevalent and less long term than the breathless lock me down proponents anticipate.
            The media reporting every adverse case tends to distort things a tad.
            But it has done a fabulous job in relegating rational appraisal to the back seat in favor of putting lots of faith in modeling which as has been pointed out would see NSW having a curfew if it had the same criteria as Victoria.
            If they reported as fastidiously on, say, every cancer case in a an under 50 year old I am sure there could be further explosive bed wetting by the usual suspects and requests for the extension of a government imposed safety blanket.

        • Agreed this is not a rational or fair response at all. The youth are losing out as always because the boomers are AFRAID. It really is that simple. When will the youth of this country stop allowing the opinions of their aged parents and grandparents drive such an antiquated political agenda? Anyone who disagrees with them is treated like a tree-hugging hippy (which apparently boomers think is a bad thing). The youth need to stop paying attention to the political hate and fear-mongering, they are the only hope this country has of a more rational future. At the moment it is like living through a witch trial, anyone who protests or exercises freedom of speech is slammed.

          • “When will the youth of this country stop allowing the opinions of their aged parents and grandparents drive such an antiquated political agenda?”

            My guess is that it roughly coincide with the youth no longer holding out to inherit the boomers’ wealth.

      • GunnamattaMEMBER

        Thats a good point Mig.

        Would an elite which has financialised aged care, healthcare, and education hesitate to cash in or position itself for your quite reasonable desire to get out of the house for more than an hour a day.

        I am not saying it isnt a pain in the jaxi. I am saying that the punterariat should harden up and demand a better economy and better economic outcome than that the government and elites seem to want to position us for.

        • We’re not going to get a fairer economy the longer people stay locked up, just look at what’s happening now – construction is being given all the jewels like always and everyone else wants to leave.

          • GunnamattaMEMBER

            I actually agree with you, and I get what you are saying.

            What I am saying is that if, after having been through all the lockdowns (and I do tend to agree the state has overreacted on facebook posts etc), you (and me and everyone else) cant accept the economy we had, and I dont think protesting the freedoms being trampled on is likely to get all that far either. (in fact I think it will be noted by the big end of town as an interesting tool the next time a little social coercion is needed – like any form of mass protest which addresses economic issues). Sort of adopting the mindset ‘We are taking the lockdown, the job losses, and the mortgage stress, etc. What are the big end of town taking?’

            Rather, I think that the quite legitimate urge to question why those freedoms are being trampled should pose first ‘What are you pricks opening us up to? and is that any better than the lived experience many were having not long ago?

          • I’m not protesting freedoms being taken away I’m critising a blunt instrument being inflicted because Andrews is scared the virus will get away again.

            Yes restrictions on movement I think have to answered for and I don’t hear anything about that, it’s crazy to impose months of house arrest and the only thing on offer is maybe someone didn’t die, and when you consider who these constrain the most and benefit the most it all leaves a very unpleasant after taste.

          • “(in fact I think it will be noted by the big end of town as an interesting tool the next time a little social coercion is needed – like any form of mass protest which addresses economic issues). ”

            You mean like the mass protests that will occur or should occur when the big banks go under and the govt decides to bail-in? Yep, they’re watching and learning and refining their game very carefully right now.

    • ErmingtonPlumbingMEMBER

      Listening to the will of the people is considered “Populist” by our betters today.
      Funny how a movement once synonymous with working class democracy is now sneered at by our liberal elites.
      In this clip Below Tommy Frank talks about how the Democrats today love to claim ownership of FDR for themselves and yet loath, deride and deconstructed his “Populist” policies.
      The bit about fake populist Donald Trumps favourite movie from 25.20 on is quite funny.
      https://youtu.be/UNOCr5HCmR8

    • TailorTrashMEMBER

      “but the old economy is dead and all the tax cuts in the world wont bring it back ”

      Gunna ..would love to believe that …but think Scomo and co are getting more strident to “ open up “
      to bring it back …..there are trees to bulldoze , sh1tty apartments to build ….debt to be taken on to “ own”
      them , countless tonnes of imported plastic to be sold to lift retail sales figures … and GDP to get a positive number on

      Sadly I think the only thing that will jolt straya out of its Block MKR MAFS stupor is a war …….and then short of trowing styrene coffee cups at the enemy and arguing about whether or not it is racist to kill them there a is a chance country will lose …..

      Or …we get a great fright and galvanise like in the 1940s

  2. The more I think about it – the more I am a little thankful Dan stuffed up Vic (full disclosure – I don’t live there, but dated a Geelonger once a long time ago!).

    This outbreak has curtailed (for now) the “secure travel corridors” that were going to bring back the international students. There is so much wrong in how this is considered an ‘industry’ in Australia nowadays. The whole services economy is far too prominent – we need to learn the distinction again between a productive and a consumptive sector of the economy. Cutting each others hair and mowing each others lawns doesn’t improve standards of living. (aide memoire – refer to LVO prolapsed an*s post from many months ago). To paraphrase PJK – this was the recession we had to have!

  3. For those that may have missed it … cough … about that lost back in time thingy …

    This ought to gizz up Dominic and posse …

    Inspiration for The Great Transformationin the Postwar Monetary Breakdown

    Karl Polanyi’s formative years in the aftermath of World War I were a period of monetary turmoil. The United States became a creditor nation for the first time, and demanded payment of the war debts that Keynes warned were unpayable without wrecking Europe’s financial systems. (Hudson, Super Imperialism, 1972, summarizes this era.) France and Britain subjected Germany to unsustainably high reparations debts, while imposing austerity on their own economies by adhering to the gold standard. Jacques Rueff in France and Bertil Ohlin in the United States argued that Germany could pay any level of reparations in gold – and the Allies could pay their foreign-currency arms debts – by imposing unemployment high enough to make wages low enough to make its products cheap enough to run a trade surplus large enough to pay its debt service.

    Most countries followed the ‘hard-money’ idea that money was (or could be made to act as a proxy for) a commodity by making it convertible into gold. Advocated most notoriously by the Austrians Ludwig von Mises and Friedrich von Hayek, the result was monetary deflation. It was a replay of what had occurred after 1815 when the banker David Ricardo insisted that returning to the gold standard would restore balance in the face of any given foreign debt payment or military subsidy. He claimed that any such payments deficit would automatically be recycled in the form of the recipient country’s demand for imports from the ‘capital-paying’ economy.[1]No such balance resulted. – snip

    https://www.nakedcapitalism.com/2020/09/michael-hudson-debt-land-and-money-from-polanyi-to-the-new-economic-archaeology.html

    • ErmingtonPlumbingMEMBER

      Going back to 1815 to understand the present!?
      Most mug punters only need the last 3 starts to know what horse to back Skip.
      Stop confusing everyone.

      • EP you have to go all the way back.

        Hudson is just using the time line from the great transformation in order to – show – how we got here during that time period, its called rigor. How is it confusing btw and why are you arbitrarily deploying the royal everyone, do you have anything to back that up or is just you.

          • Based on what argument again ????? confusion ?????

            Argument from ignorance is not a compelling form of logic.

            PS its an admission that its above your pay grade on one hand and a possibility that the information in the post by Hudson messes with the perspective some are selling [false with a side of Agnotology (not a good look)]. Yet in both cases it strongly effects the veracity of the statements by those that eschew such devices or state of knowledge.

    • Skip, commodity money for the citizens.

      Fiat money for the insanely rich.

      Which side are you on? Seriously.

      The only people who (would) support fiat money are long-term unemployed in a welfare state and the filthy rich. And the brain dead.

      I am none of those.

  4. NEW ZEALAND: Urban Development Minister Phil Twyford explains in 2 1/2 minutes the reforms late July (in case you missed it) …

    Huge urban development reforms this week … Urban Development Minister Phil Twyford … Facebook

    https://www.facebook.com/phil.twyford.mp/videos/huge-urban-development-reforms-this-week/752013772238315/

    Phil Twyford

    23 July ·

    This week generational changes have been made to the way we plan our cities, regenerate our communities and fund infrastructure for housing such as water pipes. It will mean homes can be built faster and more cheaply, and help us house more of our people sooner.

    I’m proud that the Urban Development Bill and the Infrastructure Funding and Financing Bill have passed – they, along with the National Policy Statement on Urban Development, will make such a big difference to the way our towns and cities grow.

    … IN – DEPTH EXPLANATIONS … PHIL TWYFORD’S 1st and 3rd READING SPEECHES DURING PROCESSING THE INFRASTRUCTURE FUNDING & FINANCING BILL (NOW ACT) THROUGH THE PARLIAMENT …

    https://vimeo.com/379923683

  5. Are there any Melbournians here who don’t want to get the f out of there as soon as possible

    I mean we all knew it was a sh1thole to begin with as the national capital of wokeness and cultural vibrancy, plus AFL and the worst weather in the country, and the second most expensive housing

    But now it’s truly exposed as a fascist dystopia , run by an incompetent but also hopelessly corrupt government backed by a brutal police force

    Will we see a white flight once this is “over”?

    Much like the inner cities of the US saw

    Leave it to the Chinese and Indians ?

    Would be interested to hear what born and bred Victorians are thinking

    • The Palmer Foundation is the philanthropic entity owned by the Palmer family, headed by Clive Palmer.
      The Palmer Foundation is a private entity that engages in charitable projects that enable better welfare of others, and society as a whole.

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