Houses and Holes

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Links November 15: The big risk

The G20 joke. Baseline ScenarioAustralia exposed after G20 failure. David UrenIt’s worse. RBA says commodities exposed to Chinese exports. RBAIf the Budget isn’t overspending, why should export industries be sacrificed to miners? Gittins‘ hypocrisy. More sensible ways to manage the resources boom. Tim Colebatch Why Chinese foreign investment is good. EconomistWhy bank equity is cheap.

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Green, Brown, pink, wrong.

From Nine’s Today, Laurie Oakes interviewing Bob Brown: BB: Well, I hear that the Opposition’s joining the Government in refusing to back the Greens’ legislation which is to remove the $2 fee for use of ATMs if you go to a different bank. That’s a regressive tax, it hits poor people, it’s totally unwarranted. The

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Weekend reading

#%&^%! G20 capitulates to big banks. BloombergSets course for a trade war. FTAnd ramps up the lies. ReutersLessons from 1933. FTHow to address overvalued currencies. Nouriel RoubiniThe Fed’s new bubbles. NYTThe Basel III will hurt meme. Simon JohnsonUS Korea trade deal on rocks. WSJGrantham selling. Credit WritedownsNo speculation at work in commodity prices. Pfft. EconomistIf

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Wallis abandoned

Twenty leading economists have published a letter in the FT, declaring: The Basel III bank-regulation proposals that G20 leaders will discuss fail to eliminate key structural flaws in the current system. Banks’ high leverage, and the resulting fragility and systemic risk, contributed to the near collapse of the financial system. Basel III is far from

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Copper is the new oil

The global market, that hysterical mob by which we price our lives, is tracing out its new bubble. In 2007 and 2008 it was oil that led the fever of emerging market demand, extrapolations of endless Chinese demand, supply shortages, dark hints of peak reserves and, most importantly, rampant speculative buying. This time its copper.

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Links November 12: Copper rocket

Copper hits all time high. BloombergOre up again, BDI down again. No let up in US housing deflation. Calculated Risk, BloombergUS and Europe in recession next year. John TaylorWhat up with Ireland? Calculated RiskBailout imminent. BloombergG20 balderdash. WSJChina flips bird, again. BloombergEmerging market power. EconompicSwan’s double game with ANZ. The OzDennis Shananhan cuts through on

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New Zealand gets it

This morning, this blogger ran across a reference to the Reserve Bank of NZ’s relatively new regulations regarding the Core Liquidity Ratio (CLR). The rules have been around for almost twelve months now (which says something in itself) but are worth revisiting today to examine how a closely related nation with the same banks (and

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Who’s killing capitalism?

Stephen Bartholomeusz is one our more sophisticated commentators. Late yesterday he took a turn around the G20 and Basel III actions on banks and it is useful to walk with him and ask a few sticky questions: The G20 meeting that starts in Seoul tomorrow is expected to finally launch the tough new Basel III

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Links November 11: G20!

China tightens again. BloombergKorea ramps capital controls. BloombergNo deal at G20. Michael Pettis, FTGrand bargain between China and US on yuan. Jim O’NeillYeh, right. FTGillard joins currency war. SMHNo new bank rules for us. SMHMore rates hypocrisy at The Oz. Michael StutchburyCanada’s RMBS system. Unconventional EconomistOre on a tear. I, IIBenchmark wars. I, IICotton rocket.

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Slow motion Minsky moment

Wikipaedia defines the Minsky moment thus: A Minsky moment is a situation in which investors who have borrowed too much are forced to sell even good assets to pay back their loans. In economic terms, it is the point in a credit cycle or business cycle when investors have cash flow problems due to spiraling

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The China trashes Treasuries meme

Karen Maley has a long piece today largely paroting a Dagong Credit Agency Report on US credit worthiness. It’s an interesting article that channels the argument that: Tensions between the United States and China are set to escalate after one of China’s top ratings agencies downgraded the rating of US sovereign debt, and launched a

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Are liabilities a part of banking or not? (updated)

This blogger has lost count of the times that the libertarian brigade at The Australian has argued that bank competition is alive and well, it’s just shifted to liabilities. By which they mean deposits. Which, although this blogger disagrees, at least makes some sense. But when the same set of libertarians argue that Australian banks

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Link November 10: Growing pains

Vale sticks with quarterly contracts. Steel OrbisCopper and iron ore unhinged. The new structural deficit Michael StutchbryBudget Dutch Disease. Lenore TaylorMRRT to blame. SMHBanks’ $5 trillion funding need. TelegrpahUS home prices still collapsing. Clear CapitalThe East Asian merchantilist block. EconbrowserGFC icon, AMBAC, busts. Zero Hedge QEII backlash grows. WSJChina ramps capital controls. BloombergIndian commodity demand.

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Here it comes

You’ll forgive blogger while he goes out to the back shed and destroys a few things. From The Australian today: The securitisation market will soon get a shot of adrenaline to help small banks win a larger share of the mortgage business. Eager to spur competition in a banking industry dominated by National Australia Bank,

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Kafkaustralia

According to Bloomberg the Australian government is attempting to eat its own head: Australian Prime Minister Julia Gillard will argue for special consideration for the nation’s strong banks at the Group of 20 summit amid a global push to overhaul rules on capital to prevent another financial crisis, the Australian Financial Review newspaper reported. “It’s

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Good news is bad news

Is funding so desperate at the Sydney Opera House that it must resort to hosting this kind of bubble stunt? From the SMH: An auction of luxury homes held at the Sydney Opera House last night raised just $4.1 million, much less than the $30 million vendors were hoping for, less than a week after

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G20, 19, 18, 17, 16…

There’s a swag of diplomatic maneuvering going on that bodes badly for world trade. The US has embarked on some renewed China containment strategy reminiscent of, but less formal than, the old mooted “quadralateral” of democracies, with Hillary charming us and Obama charming India. Japan can be assumed to be a party. This may be

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Links November 9: Kicking the can

The great straddle. Peter HartcherUS to push India into Security Council. FTChina’s exploding trade surplus. John Garnaut China loves QEII, US loves China’s export model, Elvis says. BloombergEveryone hates QEII and it will fail. Andy XieRon Paul to oversee Fed. PoliticoZoellick wants gold reserve debate. FTSarkozy and Hu want new reserve regime. Dow JonesMore bank

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The ‘pay more for stability’ meme

There’s an argument catching on in media commentary that the Australian banks are right to be ramping interest rates, and the Australian population is wrong to complain about it, because it’s the price we must pay for a stable banking system. Champions of this argument have included a triptych of the smarter commentators, including Michael

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RateGate builds

There were a bunch of stories out yesterday and this morning about how rate rises have sucker-punched the housing market for Sydney and Melbourne I, II. See also Delusional Economics for some good graphs on inventory and a scary take. After one result only, it’s a little early to tell how much damage is done.

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Innovation can’t save failed innovation

Amidst the ongoing banking furor, one innocent little paragraph leapt out at this blogger over the weekend: “A secret briefing note obtained by The Sun-Herald confirms Treasury is working on a plan to allow customers to carry account numbers from one financial institution to another.” We already know that a key plank of Labour’s new

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Links November 8: The rush to regulate

Irrationality all around. Phillip CoreySwan goes after exit fees. The OzMore ‘no bubble’ porn. David UrenGittins postures on Labor posturing.SMH Annabel Crabb joins bank defence. The DrumNorris: the creditors will run. The OzSydney Bubble House: icon hosts auctions. BloombergProspects for US upturn. NYTQEII & global monetary disorder. Doug NolandEnd of the Euro. Samuel BrittanObama in

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Chris Joye exposes himself

Maybe we are closer to an historic housing bust than this blogger thought. The bulls have entered outright panic. From The Australian: Christopher Joye, an Australian property market bull, yesterday offered US guru Jeremy Grantham a $100 million bet on house prices. Mr Joye, managing director of property research group Rismark International, challenged his equally

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Weekend reading: Son of Wallis Now!

Delusional Economics, Unconventional Economist and this blog demand Wallis Inquiry to address bank’s wholesale funding addiction. Deflating hooters! William PesekQEII versus everyone else. FTFleck vs Biggs on QEII. Zero HedgeCorrelation rocket. EconompicUS pending home sales down. Calculated RiskUS’ improved employment report. Calculated RiskHow many jobs does the US need? Zero HedgeFitch prepares downgrades on ForeclosureGate.

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And the winner is … Michael Pascoe

This blogger would like to congratulate Michael Pascoe. Today he wins the award for the worst ever argument published in the Australian media. For you skeptics, let’s roll the tape… Oh ye of little faith – a little pricing power causes wholesale abandonment of confidence in markets to sort out supposed hubris. So much for

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Risk on

The Bernanke Put has pulled up in a tank on the front lawn of Greenspan’s paltry moral hazard. There’s no more pretense that US central banking is about price stability in anything. Indeed, the US has embraced the complete opposite with the FOMC now openly aiming to boost asset and consumer prices. Not to mention,

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Links November 5: QE II launch

FOMC statement in plain English. NPRBernanke put. Gavyn Davies, Felix SalmonBOJ QE pumped stocks, temporarily. PragCapAnd the markets love it. FTMultilateral trade scenarios.Michael PettisBudget catches Dutch Disease. SMHDOW rocket. BloombergCommodity rocket: Copper up, B of A screwed; PIGS monstered I, II, III;

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A benevolent bust?

The FT’s Lex column has an interesting take on the RBA, commodities and the housing bubble today: Most Australians spent the first Tuesday in November obsessed with the Melbourne Cup. But the “horse race that stops the nation” did not prevent Glenn Stevens from working. The governor of the Reserve Bank of Australia raised interest

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Blowback

So, the Canadians have blocked BHP, as predicted. Good for them. Commentary is full of the usual one-eyed drivel about a “shock decision”. John Durie is typical: BHP can attempt to overturn the decision and will be as confused as everyone else given this was only Canada’s second rejection of a foreign takeover since it

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The BIG LIE

This blog has dug up some beautiful graphs that show precisely where the RBA thinks net interest margins are for the big banks. But it’s not going to show them to you. The reason why is that they’re irrelevant. Despite what all but a handful of senior commentators are telling you, neither interest rates nor