Houses and Holes


They are coming for the RBA

To me, it’s as clear as day that Australians hate their new economy. And, at face value, what’s to like? Although the MSM drones on about our good fortune, the fact is, it’s not like the old times. Back then, blind Freddy could get rich, just buy a house, then another! So long as you


Mining 1, everyone else 0

For a group of pick wielding boof heads mining sure does a hell of a job on its public relations. Such a good job, in fact, it is running rings around the city-slicking bags of fruit who are supposed to understand the services business. What the hell am I talking about? This, from the SMH today:


ANZ job ads point to rising unemployment

ANZ job ads was out earlier today. It continues its recent trend of slowing growth: Total job advertisements on the internet and in newspapers decreased by 0.6% in August. Annual growth in total job advertisements decelerated to 6.1% y/y. • Newspaper job ads fell by 3.0% m/m, while internet job advertising decreased by 0.5% m/m.


World Bank endorses MB

Many readers have noted the largish impact that MB has had on the reporting of the national media on certain topics. Indeed, one reader coined the term “”Macrobation” to describe the phenomenon. Now the World Bank is out with fascinating new research into the effect economics blogs (h/t Adrian). And it’s a ringing endorsement: Economic


Return of the Jedi

So, that was the US week that was. The August data flow was probably a little better than I reckoned on but was certainly bad (I tend to move more quickly than an economy does). Indeed, data was bad enough, especially Friday’s employment report, that the tenure of US debate has clearly shifted from worry


Safety in numbers

The MB nemesis, Gittins!, offered a piece over the weekend in which he gave the economics fraternity a caning for failing to foresee the current global slowdown. Using the now famous Carmen Reinhart and Kenneth Rogoff text, This time it’s different, Gittins! concludes: In their landmark study of hundreds of financial crises in 66 countries


A glance behind the curtain of Invispower!

Regular readers will recall that a part of the MB lexicon is the term Invisopower!. The word describes the fog deployed by regulators to conceal the past (and ongoing) reliance of Australia’s large banks upon public support. From the SMH via Wikileaks today we can peer through a small opening in that fog and discover


Disleveraging and retail

Over the past couple of days, I noticed a correlation in the trends between housing credit growth and retail sales growth that is worth a mention. Of course, at MB, we’ve long established the link between house prices and retail sales, but here is a pretty clear illustration of the link between mortgage creation and


Global manufacturing at the brink

It may come as some carrion comfort to Australian manufacturers to learn that the majority if their global brethren are also now in recession. Yesterday and last we night we learned from PMI releases that the manufacturing sectors of Taiwan, South Korea, UK and Europe all contracted in August. China managed an insipid rise as


Will rates work again?

  I note today that Australia’s favourite bullhawk, Chris Joye, has claimed that if: …the RBA starts cutting rates, I would be bullish on housing. Unlike almost any other housing market in the world, Australia is unique insofar around 90% of all mortgage debt is purely adjustable-rate and priced off the RBA’s target cash rate


Capex boom broadens (a bit)

There’t no doubt that Australian capital investment intentions are booming. The good news is that in the latest round it was the broader economic sectors, including manufacturing that drove all of the jump  in intentions. Here is the total chart: You’re looking at the farthest bar on the right. That’s now the full year capex


Manufacturing recession deepens

The PMI is out today and confirms that the manufacturing recession that has been running for a year is deepening. The Australian Industry Group (AIG) describes conditions thus: Conditions in the manufacturing sector deteriorated further in August with the seasonally adjusted Australian Industry Group-PwC Australian PMI® down a slight 0.1 points to 43.3. It remains


Pulling a rabbit out of a hat

Last night several more Fed boffins were on the hustings giving dovish speeches. The first is Dennis Lockhart. Here is the executive summary: While acknowledging that downside risks to the recovery have increased, Lockhart expects a modest cyclical recovery to proceed. In his view, a number of necessary structural adjustments are holding back economic growth in


Gittins!, Pascoe dance on manufacturing’s grave

Nobody enrages me like Gittins! Not even Pascoe. Sadly for me, the two Fairfax commentators today engage in an awful double-act of cavorting on manufacturing’s grave. Let’s begin with Gittins!: And the fact is that, throughout most of the 20th century, we diverted a fair bit of our income from agriculture and mining to subsidising our


Mining is making us lazy

Well…forgive the headline. Mining making us less “productive” would be more accurate. I’ve certainly been less than nimble in bringing to your attention a new study by the Australia Institute into Australian productivity. It was released six days ago but better late than never. And what a fascinating study it is. Explosive even: The recent debate


The Fed is boxed in

So, yesterday’s and today’s US data has come in mixed. So far, markets have twisted the results to the upside. On Monday, Personal Income and Outlays for July came in above expectations at 0.8 in July, and real PCE increased 0.5% as the price index 0.4 percent. Pending Home Sales Index came in below expectations with a 1.3


How an SWF works

Several commenters have asked me to explain how I see an Australian sovereign wealth fund and resource rent tax actually working. Several others have questioned the wisdom of an SWF held offshore when Australia runs a current account deficit (CAD). That is, so long as we invest more than we save, we don’t have any money


Pettis: 3% growth coming soon to China

From Michael Pettis comes this sobering series of forecasts for Chinese growth. Wake up, Canberra. My basic sense is that we are at the end of one of the six or so major globalization cycles that have occurred in the past two centuries. If I am right, this means that there still is a pretty


The ‘gold bubble’ meme

Some folks just don’t get it. According to The Intelligent Investor at the SMH today, gold is approaching its top because: “a German company, already with operations in Europe and the United States, was brining a ‘gold-to-go’ self-service machine to shopping centres, hotels and airports. Everyday shoppers and travellers worried that modern economies were on


New home sales tank again

What a shocker. New home sales down 8% in July after an 8.7% fall in June. The index of new home sales is now below the levels reached during the GFC. From the HIA: New home sales suffered a sharp decline for a second consecutive month in July 2011 said the Housing Industry Association, the voice of


Another way to help manufacturing

As we know, the economic mandarins of Canberra have targeted manufacturing for extermination to make way for booming mining investment. To me, this is profound economic irresponsibility. Without an industrial base, no nation can expect to be consequential. There are three reasons for this. First, the notion that services can carry the load does not


It’s all good

Below find Glenn Stevens testimony in parliament today with a bit of commentary thrown in: Opening Statement to House of Representatives Standing Committee on Economics Glenn Stevens Governor Melbourne – 26 August 2011 Quite a bit has happened in both the global and local economies since we last met with the Committee. In February, we had seen


Fitch debunks decoupling

A new Fitch and Oxford Economics report nicely models the global knock-on effects in the event of a US recession. And its bye bye decoupling, even though the assumptions used are quite conservative. To begin, Fitch lays out a moderate recession scenario: Although a “double-dip” recession in the US is not Fitch’s base case, the agency


Groundhog day

So, here is what I wrote on the eve of the Jackson Hole conference last year: The S&P500 tilted at the the key 1040 level again today, the neckline of a scary head-and-shoulders top pattern, and held. The Dow is sitting right at the psychologically potent 10,000 level. Gold is sitting right below all time


Labour joins capital in the manufacturing fight

From The Australian this afternoon: UNION leader Paul Howes has attacked the Reserve Bank and Treasury for allowing interest rates and the dollar to skyrocket. The Australian Workers Union boss called for a change in the RBA board’s make-up, saying the current directors had allowed rates to remain high for too long, and lashed the