Houses and Holes

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Weekend reading

Contagion slowing. Ireland, Spain, Portugal, Greece.European polity turning nasty. BloombergAnd the global systemic risks of Ireland. Naked Capitalism, Alphaville, Zero Hedge, Baseline ScenarioIceland vs Ireland. Paul KrugmanWhy equities are falling. BloombergSomeone else is breathing. DataDiaryNo oversupply coming here. FTNo housing bubble, banks strong, no issues with deficits. Gittins is asleep.The soft landing for housing. Michael

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Glenn Stevens condemns bubble, banks, self

From the Glenn Stevens Senate testimony today, the SMH reports the following: The boss of the Reserve Bank has stood by the actions of the major banks during this month’s latest round of mortgage rate hikes, saying banking is not like a normal business. RBA governor Glenn Stevens was peppered with questions on the banks

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The gold bubble meme

Leon Gettler has a simple and neat summation of global macro today: The global financial crisis has created two worlds. First there is the real world of increased job insecurity, growing numbers of long-term unemployed, muted consumer demand and drip-fed credit And then there is the magical world of bubbles. They seem to be everywhere,

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Links November 26: Gold bubble?

This does not look good. Ireland, Portugal, Greece, SpainIrish nationalisation. AlphavilleChina bearishness. M. Pettis, Un. Economist, Bear FellerAustralia’s agricultural protectionism. Calyton Utz (h/t nakedcapitalism)Recession quarter. Peter MartinCameron Clyne wants banks to listen. SMHShould the RBA regulate the banks? Glenda KorporaalBubbles everywhere. Leon Gettler. Gold sentiment. Mark HulbertWA property bust. Delusional EconomicsNBN pricing under fire. SMH

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RBNZ calls a spade a ponzi

One of the advantages of having a small neighbour that shares the same banking system is that we can glance over and see what kind of shadow we cast. And it is daaaark indeed. From Banking Day today: New Zealand is in a highly vulnerable macroeconomic position and may require a difficult transition, the Reserve

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Pricing the miracle commodity

This blogger has attempted to reverse-engineer the major miners’ quarterly ore pricing formula before. It is not an exact science, but it has concluded that prices tend to rise in line with the average spot price of the trailing quarter, whereas when the price falls, they seem to lag the average. In the same post,

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Links November 25: Rally my butt

Extend and pretend in Irish mortgages. AlphavilleMore contagion. Spain, Portugal, Greece, IrelandPortugal and Spain. EurointelligenceSpain. WSJWhy austerity is wrong. Martin WolfSigns of life for US employment. Calculated RiskNow its peak coal. Bloomberg Offshore refinancing costs to worsen in 2012. SMHOre still ripping. BloombergWeather the cause?!? Metal Miner

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Who’s to blame for bank populism?

Stephen Bartholomeusz writes: The anti-bank sentiment unleashed by Joe Hockey and the weak response to it by Wayne Swan has now resulted in a coalition of re-regulationists, with the six cross-benchers pledging their support for the Greens’ dangerous proposals for “reform”. Now is the time for Swan and Hockey to renounce populism and make the

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Son of Wallis Challenge

The bank debate is not going well. Following the lead of our populist political class, the discussion has bogged down in the relative irrelevance of interest rate rises and whether or not banks should be allowed to move their mortgage rates more or less than the Reserve Bank. The obsession with lowest-common denominator politics means

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Tap of the mernin’ to ye

This blogger has a couple of thoughts on the Irish crisis. Fact is, as hinted at recently, prima facie, it’s much more attractive for Ireland to default. It’s write-down now or zombify yourself through more debt and internal deflation. This is pretty obvious and the Irish people may therefore be in a position to force

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Links November 24: Contagion!

Yields up in Spain, Portugal, Greece, Ireland Euro and risk currencies smashed. $US up. BarchartMetals trimmed. BarchartThe Irish rebellion. FTIreland’s TARP. Money GameIreland’s mistakes. FTIMF: Ireland must deflate internally. ITWhat Ireland should do instead: default. Guardian, Bloomberg, NYT, WSJyuan trades against ruble. China DailyUS housing still stuffed. Calculated RiskBlock busted. SMHMiracle commodity up again. BloombergIndian

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Future shock

Bloomberg reported yesterday that: New Zealand’s credit-rating outlook was lowered to negative by Standard & Poor’s, spurring traders to buy protection on the nation’s debt and snapping a three-day rally in its currency. “The main risk to the ratings would be a significant weakening in the credit quality of New Zealand’s banking sector,” S&P said

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The death of Invisopower!

In today’s AFR, Joe Hockey makes a simple and elegant argument for Wallis: The Wallis Inquiry formally rejected government guarantees of private companies (including deposit guarantees) for fear of inducing irreversible “moral hazards”. These risks found in all insurance markets where the availability of such protection has the perverse effect of encouraging beneficiaries to assume

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RSPT anyone?

Via Peter Martin, here’s an outline of Joe Hockey’ terms of reference for a real Wallis Inquiry. They’re a bit tilted towards how do we keep the ‘whole ponzi going’ and the greatest omission is any mention of mortgages but actually they are pretty good. And wide enough that anything missed will get in anyway.

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Links November 23: I said, SHUT IT DOWN!

Joe’s terms for Wallis. Peter MartinFear and loathing of Joe. The AustralianJoe the idiot. Hewitt, BartholomeuszKen Henry embraces Dutch Disease. Peter MartinUS austerity drive. Bloomberg, KrugmanUS bank face $100 billion BaselIII shortfall. FTUS housing shadow inventory. Calculated RiskHow Ireland’s bailout works. ReutersEurope in real trouble now. BloombergThe greatest central banker of our time. RCMThe coming

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The Claytons Inquiry

It’s the Wallis Inquiry you’re having when you’re not having a Wallis Inquiry. And Stephen Bartholomeusz outlines it today: Earlier today Suncorp’s chief executive, Patrick Snowball, made a considered contribution to the debate, noting that since the crisis all the banks had diversified their funding and reduced their dependence on offshore wholesale funding markets. “This

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Come on, Gotti

This morning Robert Gottliebsen attempts something of a backflip with three million twists after his egregious defence of housing bubble interests late last week that was deconstructed nicely by Delusional Economics. Gotti begins: The Australian newspaper followed up by revealing that the manager of Treasury’s Macro Financial Linkages unit, Phil Garton, believes that if financial

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Australia’s crossroads

This blogger began reading Doug Noland during the ‘dot bomb’ bust ten years ago. During that bear market, Noland consistently analysed events through the prism of an underlying credit bubble that was the product of an unholy alliance between the US Fed, US securities markets and the government sponsored entities Fannie Mae and Freddie Mac.

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Links November 22: The global grinder

Arbitrage capitalism. Doug NolandIreland bailed. Calculated RiskStop the bailout blackmail. Jeremy WarnerWeek ahead for DOW. Calculated RiskCopper bubble explosion. WSJRothschild backs Indonesian coal. FTSwan doesn’t mention securitisation guarantees. SMHWorld steel output up. Steel OrbisThe Joye of the RBA. The Australian (h/t The Lorax)

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Australia pwned

If you want to understand just how deluded Australia is strategically then take a look at the above extraordinary chart. Business Insider ran this under the heading “Why China interest rate tightening matters” (h/t The Lorax). And sure, it does. But that’s not what this blogger sees. In 2004 our exports to the US were

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Hope is kindled…

This is music to this bloggers ears, or at least, eyes. From The Australian (h/t the Lorax): A senior Treasury official has sounded the alarm over Australia’s property market. He has warned that the prospect of a sudden and dramatic drop in prices is “the elephant in the room” and should not be ignored by

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Weekend reading

Treasury acknowledges housing bubble. (h/t The Lorax) The AustralianBernanke translated. WSJUS bank stress. AlphavilleUS so captured. RortybombUS manufacturing. Calculated RiskThe rape of Ireland. BloombergPortugal and Spain to follow. BusinessWeekChina’s inflation opportunity. ReutersChina’s coming bust. AlphavilleThe harmonious society. Silence!ReutersSensible Koeans. JADSoros on gold. Precisely.And now for shadow banking. Gillian TettChina/US price divergence. Gavyn DaviesMore MRRT bluster

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RBA confirms death of housing

In a speech this week, RBA Deputy Governor Rick Battelino offered southern Queensland property investors a few crocodile tears before driving this spike home: While there are differences between sectors and between regions, the Australian economy overall is doing well. We expect that the economy will continue to grow at a solid pace over the

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Reviving the dodo

Yesterday Ian Harper, one of the minds behind our failed Wallis Inquiry financial services architecture, wrote in the AFR that “More needs to be done to redress the current imbalance between stability and competition in the Australian banking system. Effective stability has returned, however competition has not revived, in part due to the lingering side

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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