Houses and Holes


The people want a mining tax

Per Capita is a small progressive thing tank run by former LEK consultant, David Hetherington. Today it released a new study of Australian attitudes towards the tax system. Hetherington says: The Per Capita Tax Survey for 2011 has asked 1,300 Australians for their views on personal tax contributions, overall taxation levels, public service spending and


September 19 links: Fed week

Week ahead of the Dow. Calculated Risk FOMC preview. Calculated Risk Q3 earnings estimates keep falling. Bespoke Five outcomes for Europe. Money Game More Europe disaster porn. FT Europe will monetise. Simon Johnson Charles Darwin vs Adam Smith. NYT How China can really help Europe. Patrick Chovanec Central bank options. Gavyn Davies Parliamentary budget office.


A short history of economics

Bloomberg has recently run a series of excepts from Sylvia Nasar’s forthcoming book, “Grand Pursuit: The Story of Economic Genius,”. All are excellent, pithy and brief and make terrific Sunday reading. Together they constitute a quite useful primer on the schools of economics that we now find caught in the defining struggle of our time. The


More banks throw in the towel on rates

Yesterday it was NAB pushing out its forecast of rate rises until the end of 2012 (which may as well be forever). Now it’s HSBC. Probably sensibly given the global environment, Paul Bloxham has abandoned giving a forecast at all, telling us simply that the next move in rates will still be up. Reports below:


More on bank funding vulnerability

MB has carried a lively debate this morning on interest rates and the bank’s vulnerability to wholesale funding. The Unconventional Economist quoted from the new RBNZ Financial Stability report to show that the New Zealand central bank is very concerned that markets are signaling that the Australian banks are just as vulnerable as they were


US recession data marches on

Last night’s US data was not reassuring. The two North Eastern Fed manufacturing indices both missed market expectations. The Empire State Index fell further, prices rose and employment dropped, a nasty combination: The Empire State Manufacturing Survey indicates that conditions for New York manufacturers worsened for a fourth consecutive month in September. The general business conditions index


September 16 links: QE gone

Down: $US, gold, metals, grains, Treasuries Flat: CCI, Aussie Up: euro Contagion reversion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany


No point of intervention for currency

Find below footage of Wayne Swan speaking with Bloomberg this afternoon. His responses include deeply contradictory commitments to a diversified economy and an Australian dollar free to appreciate for ever. Apparently he “would never want to see our economy become too excessively dependent upon one country or one commodity”!?!


Car sales bounce again (or do they?)

ABS new cars ales are out for August and show a 3.3% jump yoy: TOTAL NEW MOTOR VEHICLE SALES The August 2011 trend estimate (83 720) has increased by 1.3% when compared with July 2011. Seasonally Adjusted – The August 2011 seasonally adjusted estimate for new motor vehicle sales (87 935) increased by 3.3% when


Consumers’ dour expectations

Westpac has today released its “Expectations Chart Pack”, which includes both inflation and employment expectations (find it below). This month’s results are fascinating. It is no surprise that consumers view of future inflation remains unchanged from last month as the heat has gone out of the CPI debate: I am a little surprised, however, at


China doom mongering

Exclusively from Michael Pettis’ newsletter: The world seems to be rapidly moving away from the China-is-the-most-successful-economy-in-the-history-of-the-world rant to the China-is-weeks-away-from-collapse rant. But repeating a story often doesn’t make it more true. My guess, and it is only a guess, is that China can continue with the current growth model for at least another four or


More signs of US slowing

I’ve been arguing for some months that the US economy is slowing. More recently I added the narrative that at the zero bound for monetary policy, where the core price signal ceases to have meaning, it is the expectation of price intentions in the economic leaders themselves that becomes the primary signal. In short, it


September 15 links: Feeling the effects

Down: $US, energy, metals Flat: CCI, gold, grains, Treasuries Up: Euro, Aussie Contagion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany 2


CPI revisionism

Here are a couple of bank takes on today’s ABS CPI revisions. Consensus is that the RBA’s job of holding rates steady just got a bit easier. I beg to differ. The ABS just handed a PR weapon to every disgruntled business lobby in the services economy. Anyways, Rumplestatskin, our very own CPI guru, will


Moody’s downgrades French banks (updated)

Just flashing across the terminal, Moody’s moves on French banks: By David Whitehouse Sept. 14 (Bloomberg) — Societe Generale SA had its debt and deposit ratings cut by one level to Aa3 from Aa2 with a negative outlook by Moody’s Investors Service. The bank has adequate capital to support its exposure to Greece, Portugal and Ireland, Moody’s said


Interest rate magic

Consumer Confidence for September is out and shows a jump of 8.1%. Bill Evans puts this down to: This is a surprisingly strong result. We think it emphasises just how important interest rates are to households. Recall that since early May the Reserve Bank has been threatening to raise interest rates. As recently as the August Board meeting


Do we need a media inquiry?

Well…yes…I should say so. Rupert Murdoch owns 70% of Australian newspapers. One of his UK operations has been shown to use unethical practices on an unsettling scale. Those two seem fair enough reasons to me. On the first, the concentration of ownership in newspapers is both a competition issue and a social-democratic one. Many of


September 14 links: Myths and rumours

Down: $US, grains, Treasuries  CCI, metals, Euro, Aussie, gold,  energy Rampant contagion: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany 2


The Pascoe indicator

This afternoon, Michael Pascoe wrote a soothing piece on the European crisis that I found troubling. We don’t need to get past the first two paragraphs to find out why: Hands up anyone who thinks a Greek debt default is inevitable. OK, absolutely everyone can all put their hands down. That’s what Europe’s banks think too –


NAB Survey shows markets fallout

The Nab Survey for August is in and business conditions and confidence are suffering on the back of global volatility. According to the NAB boffins: Business confidence dropped sharply in August, with heightened global uncertainty, large falls in equity markets and the fear of debt market contagion. Confidence deteriorated across all industries, except recreation & personal services


2008 rerun

From the excellent folk at Forecast comes another disturbing prognosis this morning: European banks continue to be hammered again this morning on a combination of escalating Greece-centred periphery fear, generalised growth and risk re-pricing (Hang Seng hit especially overnight) and also bank downgrade talk. Once again, the negative feedback between periphery pricing, bank valuation, and


Is the equity market a dill?

Yes, I’d say it is. As FOMC member, Thomas Koenig put it recently in a CNBC video interview with Steve Liesman: …a capitalistic economy – if you really believe in its long-term benefits – has cycles. People do make mistakes. See, the market is valuable not because it’s the smartest in the world, but because


Attention manufacturing, here’s your hire

Not just manufacturing, actually. There needs to be a new umbrella peak body/lobby group covering all non-resource exporters – manufacturing, tourism and education (maybe primary goods too). That group needs to go head-to-head with the Minerals Council of Australia over the soul of the Australian people and the fear gene of the Australian government. And


September 13 links: The crash that didn’t come

Up: $US, gold energy, Flat: Treasuries Down: CCI, metals, Euro, Aussie, grains Greece parabolic: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year 10 Year Germany


Australian bank stress still elevated

Here’s a couple of quick charts illustrating the degrees of market-perceived bank stress across the Western world. Today’s CDS prices for Europe and the US: And Australian banks: Not much alleviation of recent stress for Australian banks, though no deterioration either, which has definitely happened in the European and US banks in the last week


Lending finance sees an uptick

The ongoing sense that we’re seeing a bottom (at least temporarily) in credit data, received a boost today with a small bounce in the ABS Lending Finance report for July. The key points are below and show an across the board improvement with the exception of fixed personal finance. The biggest uptick is in business


Gold looks vulnerable

I am of the view that the bull market in gold is far from over. To me, it’s obvious that so long as the fiscal and monetary frameworks that support the $US are in chaos, then gold fundamentals are strong. Arguments over the value of the metal are irrelevant. You can’t price chaos. This is


Is the RBA accountable?

Well…that was quick. In the early days of last week I wrote a post called “They are coming for the RBA”. In it I described how: It is one thing to be raising interest rates, or threatening to, when jobs are raining from the heavens. You’re an economic warrior then, gleaming with righteous sweat as


September 12 links: Endless suffering

Obama’s plan would avert US recession. Bloomberg Krugman says none of the package will pass Congress. Bloomberg Gauging debt ceiling damage. POS (h/t Naked Capitalism) Week ahead for Dow. Calculated Risk $US rocket. Bespoke Eurobond is dead. Wolfgang Munchau Germany set to give up on Greece. Bloomberg Greece announces new property tax. Reuters Troika to return. The


What does Obama’s plan achieve?

Courtesy of Zero Hedge comes this take on the impact of the Obama jobs plan, the operative words being “how congressional Republicans will respond to the proposal”: BOTTOM LINE: The President’s proposal is larger than expected, with spending proposals and tax cuts both somewhat greater than expected. This proposal does not imply a significant shift