Houses and Holes

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Links November 19: It’s all good

Risk Oooooaaaawwwn. Metals, GrainsForeclosureGate to roll on. NYTThe Irish boondoggle. NYTMore capital for US banks. WSJUS leading indicators up. EconompicUS retail sales. A trend beckons. Tim DuySlow China. Michael Pettis, FTBoom. SMHTax cuts madness. The AgeWhy don’t we have whingers like this in exports? John DurieOre to become buyers market. MinmetalsBut not yet. Baosteel

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The three-ringed circus

There’s a great piece today by former IMF chief economist, Simon Jonson, in which he argues that: Greece’s EU/IMF program heaps more public debt onto a nation that is already insolvent, and Ireland is now on the same track. Despite massive fiscal cuts and several years of deep recession Greece and Ireland will accumulate 150%

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Links November 18: European resolution

How to resolve Europe. Simon JonsonVersus the growing anger at Germany. FTVersus Europe’s doom. Ambrose Evans-PritchardUS, UK houses falling again. Independent, Calculated RiskUS construction down and out. Steel OrbisThe way out. Martin WolfChina to buy gold. Zero HedgeEven as it buys more Treasurys. WSJUnleash QEIII-X. EconompicMore bank irrelevance. SMHQuarterly contracts here to stay. BaosteelChanos reiterates

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Bloggers rule

Here’s a couple of kick-ass links: First, Delusional Economics‘s insider correspondent, Deep Throat, has a brilliant exposition of mark-to-market accounting and the impact it has on big bank capital ratios in an up market, or down. Second, Critical Influence has a super exposition of the dark history of income to house-price ratios. Neither is to

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The Federal Bond Insurance Corporation (FBIC)

Whilst just about every man and his dog in the bank debate remains focussed on the irrelevance of interest rate margins, this blog has been thinking about how to address the underlying cause, the banks’ dependence on foreign funds and how to manage it. It’s come up with the following: The Federal Bond Insurance Corporation

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Ireland vs Australia

The Europeans are learning a very hard lesson and it is this: you should never lock yourself into macro-economic settings that cannot be altered when conditions change. That is the central problem confronting the European periphery, they are stuck in a currency that cannot be devalued to improve their competitiveness. Thus they lurch from budget

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Links November 17: The miracle commodity

Dollar up, all else smashed: Grains, meats, energy, metals, BDI.And iron ore rises!?!The back-up in US bond rates. FTIreland’s woes. CalculatedRisk, Alphaville, Moneygame, Matthew LynnOTC derivative stall. AlphavilleUS housing – down in 2011. Calculated RiskChina overtaking US in global power. WSJIMF boots dollar. BloombergDemocrat confusion. FTFat margins mystery. SMHPerhaps Stutchbury should have read it. BHP

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CBA’s ponzi-free quarter

From BankingDay today: Monthly data on lending finance from the Australian Bureau of Statistics shows a mild rise in commercial finance commitments over the last quarter, after months if declines. Personal lending volumes are rising gently are back over levels of new business experienced before the financial crisis. These factors gave rise, in the context

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Links November 16: Reds under the beds

Norris joins Smith in warning of Reds under Beds. SMHMore bank rate rises coming. The AgeAaaaand, get ready for more of this. The AgeBe honest. Right back at ya, Michael StuchburyLooks like covered bonds. The AustralianChina’s winning model. Peter HartcherUS winning currency war. EconbrowserNO QEIII. David RosenbergEmpire manufacturing collapses. Zero HedgeEurope toying with disaster. Ambrose

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Crowded trade

If you’ve been wondering why the Australian dollar is so strong, much stronger than anyone in the media has acknowledged, then Bloomberg has a must read piece today. The quotes from bond investors are uniformly and amazingly…uniform: “The Australian dollar is among what we’re calling the world’s new safe havens,” said Jonathan Lewis, founding principal

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March of the rent-seekers

Yesterday on the ABC’s Inside Business, Alan Kohler interviewed David Gruen, CEO of Lateral Economics and Peach Financial. Kohler introduced Gruen as “…an independent economist who’s currently studying the issue and also has skin in the game, running a small mortgage broking business” which, this blogger supposes, scrapes home as disclosure. Peach is a mortgage

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Some good news

From BankingDay: A series of reports from journalists with Swan and Prime Minister Julia Gillard at the G20 meeting, in Seoul, culminated in a front-page lead story in The Australian headlined: “PM helps big banks beat new G20 rules”. The report said Gillard had “won significant concessions for Australian banks at the G20 summit …

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Beware the chastened superpower (updated)

With the amazing shrinking fig leaf of the G20 leaving us all exposed to the great powers worst, there’s some overdue angst in the media and officialdom about where the dollar is headed. From David Uren at The Australian: With Australia standing out as almost the only open capital importing country with strong economic fundamentals,

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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