Houses and Holes

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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

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Links November 4: Go to sleep little sheep

Bank strategy working. Apparently, it’s all about interest rates:Jennifer Hewitt on small business pain David Uren on gouging, notJohn Durie on ACCC powersScott Murdoch’s blahLenore Taylor supports Hockey’s nine pointsTerry McCrann & Stephen Bartholomeusz apologise for WestpacExcept Glenn Milne, who gets that it’s much bigger.Fed goes for $600 billion. BloombergQEII pushed RBA’s hand. WSJ, BloombergEmerging

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Hats off to a real banker

The SMH reports that today the chairman of Adelaide/Bendigo Bank Robert Johnon has called for a new Inquiry into banking: Bendigo and Adelaide Bank Ltd has called for another parliamentary inquiry into Australia’s financial system to address the banking system’s reliance on offshore funding. Bank chairman Robert Johanson told shareholders he hoped the Senate’s inquiry

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The death of housing

For many years this blogger has tracked the great Australian housing bubble with increasing incredulity. It eventually concluded that is was so vast, so institutionalised and so vital to the savings of the middle class that the bubble was only going to burst when all of its many supports faced no available choice to keep

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On their knees

If you want to understand how and why the Australian banks can flip the bird at the nation with impunity, you need look no further than the pathetic response of the senior commentators of the fourth estate. Their combined lack of imagination, curiosity, intellect and, above all, cohones, is the banks impunity. Responses vary from

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Links November 3: Bank bashing, my butt

Piss weak bank fallout. Tim Colebatch, Peter Martin, Elizabeth Knight, Matthew Stevens, Michael Stutchbury, Stephen Bartholomeusz, Lenore Taylor, Rob Burgess.QEII risks end of the dollar. Ambrose Evans-Pritchard PIGS on a spit. Calculated Risk, EurointelligenceIreland bailed out in a month. Businessweek.No currency war here, pffft. EconompicHow China can win it. ReutersPotashCorp in the bag? SMHManufacturing leading

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0 for 3 and the fallout

Well … this blog has lost its interest rate touch, that’s for sure. It has now blown it two months in a row and underestimated the banks to boot. As a contrarian it should have known better than to bet with the pack. The statement on monetary policy is kind of interesting. It meanders through

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Canada right to rebuff BHP

As a liberal and believer in functional markets, this blog reckons that from time-to-time it is necessary for policy to shape appropriate competition. Australia has always prided itself on “punching above its diplomatic weight”. The narrative of Australian foreign affairs is littered with this interpretation of the twentieth century. Some have interpreted this as a

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Links November 2: The China punt

The China question. John GarnautChina’s property plateau. Money Game h/t Naked CapitalismChina exporters upset already. Washington PostChina’s aging to slow growth dramatically. BloombergBut not yet. PragCapPotashCorp slipping away. FT, BloombergMore Dutch Disease for tourism & manufacturing.Zombie ideas. John QuigginCup and handle exhausted in BDI. BDIWhy the RBA should raise rates. Henry ThorntonThe future of iron:

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Three financialisations

This post arose from today’s assessment of the September credit aggregate statistics. As noted in the post, lending is still a mix of consumer strength and business weakness. From a longer run perspective, this blogger is interested in this ongoing divergence because it reinforces an historic trend toward consumer lending, completely dominated by mortgages, and

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Wallis on, Wallis off

Alan Kohler offers a confused take on the prospect of a new Wallis inquiry today. First, he argues rightly that: The big problem lies not with the banks and “collusive price signalling” as Joe Hockey calls it, but with the refusal of politicians to acknowledge that 40 per cent of bank funding comes from offshore.

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No rate rise here…

RBA September credit aggregates are out and the results are sluggish in their terms. Credit growth is still a mix of moderate consumer strength and business weakness. Owner-occupier mortgages were up 7% annualised and investors 7.8% for total mortgage credit growth of 7.3%. This blogger has noted before that, owing to the vast distortions in

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Links November 1: Rates week

Why inflation will stay low. David UrenBank gouging (a MUST read). Milind SathyeRaw edge of the boom. Michael StutchburyBretton Woods 2 and the G20. Simon JohnsonSure you can have austerity, just don’t expect growth. EconospeakWeek ahead for the DOW. Calculated RiskBring the shareholder revolution on. The Age$US begins to climb. Zero HedgeNot happy, Japan, China.

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Weekend Reading

US economy growing at 2%, below pre-recession level. Calculated RiskStill riding inventories. David RosenbergConsumers still in funk. PMI not. Zero Hedge I, IIForeclosureGate now hitting sales. BloombergWhy this US cycle is different. EconompicChina dependency index. The EconomistChina overstretched, overvalued. FTClancy Yates is wrong on bank competition. Terry McCrann thinks we don’t get it about China.

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Royally, globally, screwed…

Australian dollar versus the US dollar: Flash Player 9 or higher is required to view the chartClick here to download Flash Player now View the full FOREX:AUDUSD chart at Wikinvest And the Korean Won: Flash Player 9 or higher is required to view the chartClick here to download Flash Player now View the full FOREX:AUDKRW

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Links October 29: Dollar shocker

IMF endorses this blog: dollar overvalued, need giant RSPT. The AgeChina’s growing costs. Gavyn DaviesForclosureGate linkfest. Barry RitholzEuropean schlerosis: FT, WSJ, Alphaville (h/t Naked Capitalism) See also Delusional EconomicsBond bull death. Econompic, Calculated RiskEnd of the Wen put. William PesekMr Smith goes to Canberra. Peter Martin Eeeuuuw. And for a more sickening take. Matthew StevensVale’s

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Westpac drops a clanger (updated)

This blogger will analyse at greater depth the new Westpac bubble-busting report soon. For now however, here is one spectacular quote that finally confesses the truth about Australian banks’ new role as wards of the Australian state. There is no need to hide it anymore, they own us: External shocks are potentially more problematic. A

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Grantham responds

Global bubble maestro, Jeremy Grantham has responded to the deluge of criticism coming from such housing interests as CBA and Christopher Joye. Here is the money extract and full newsletter below: I happily concede that the U.K. and Australian housing events are not your usual bubbles. Australia, though, does pass one bubble test spectacularly: we

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Corporate dissonance

According to Elisabeth Knight at the SMH: If BHP’s management is to be criticised for this offer it should be on the basis of potentially under- estimating the political backlash from the Canadians. It is too early to make that call, given the final adjudication has not yet been made. BHP knows from recent experience

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…Sell the fact

If you value your sanity, don’t listen to the day-to-day drivel of market prices. Markets are down because the WSJ has published a story, rumoured to be leaked form the Fed, describing the new QE program. Here’s the money quote: Unlike in March 2009, when the Fed laid out a program to buy $1.75 trillion

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Thursday October 28: Buy the rumour…

The QEII plan. WSJBernanke’s backflip. QEII little. Tim DuyBuy the rumour, sell the fact. BloombergOrwell’s curse: G20 resumes currency war. BloombergFT disagrees. FTNaked Capitalism disagrees with FT. Naked Capitalism Wall St’s new gambling model. Michael LewisMortgage insurance bailout. Chris WhalenGreece sick! BloombergWhy does The OZ persist with Frank Gelber?Nick Xenophon approves senate bank enquiry. BSAre

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Slow Australia (not for the faint of heart)

Today’s links have a range of pieces discussing China’s development model and its possible slowdown. In the Reuters’ piece, a range of analysts describe the middle-income trap awaiting China. That is the historical phenomenon of developing economy growth stagnating once average incomes hit the $7000 range. Here’s the money quote from the piece: According to

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BHP digs us a hole

Don’t say this blog didn’t warn you. From the SMH today, BHP’s Potash bid is in deep trouble: Saskatchewan’s premier said Australia wouldn’t approve of BHP Billiton’s foreign takeover of Potash Corp and Canada shouldn’t either. Premier Brad Wall continued to step up the pressure to make sure Canada’s federal government blocks what would be

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Links October 27: Slow China

China to slow to 8% growth forever. ReutersSame topic but less convincing. Zero HedgeOne man, one vote in China. Gideon RachmanChina versus Japan vis. internal rebalancing. Michael PettisMervyn King: break up the banks. TelegraphAnd some distance to the rear, Peter Martin says Hockey is right. Chewing on his dust, Jessica Irvine sort of agrees.American house

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Last redoubt of the cowboy capitalists

Der Spiegel published a brilliant study of the current pricing dynamics in the copper market this week. It is a fascinating and terrifying glimpse of the evolution of global capital’s shiny new bubble: metals. From the piece: In Manhattan, only one block from Ground Zero, 12 men are sitting at a round table in a

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No Joe (updated)

Here’s a scorecard for Joe Hockey’s nine point plan on bank re-regulation. This blogger can see why the Australian Bankers Association responded positively. Not much to fear here. 1. Let’s give the ACCC power to investigate collusive price signalling (that is, oligopolistic behaviour), which is exactly what Graeme Samuel has called for. H&H: And what’s

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Links October 26: Commerce not capital

Joe’s nine point plan to nowhere. Joe HockeyWhat copper can tell us about the dollar. Der SpeigelWhy capital controls rock. FTNYC as a microcosm of ForeclsoureGate. Naked CapitalismBill Black as a macrocosm of ForeclosureGate. MSNBCToo small the stimulus. Paul KrugmanUS housing inventory. Calculated RiskResentments between the rising and falling. FTSoft bids for ore. Reuters

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Not Macfarlane

The more things change the more they stay the same. From the SMH: The shadow treasurer, Joe Hockey, will call for an inquiry into the banking system today with the National Australia Bank, Westpac and the ANZ all expected to reveal record profits. In an address to the Australian Industry Group entitled ”It’s time to

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American housing resumes its crash

Those who believe that the danger of a double-dip recession has passed should take pause today to register an American housing market plunging with renewed vigor. As Calculated Risk reported over the weekend: Clear Capital™ Reports Sudden and Dramatic Drop in U.S. Home Prices “Clear Capital’s latest data through October 22 shows even more pronounced

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Services won’t save us

Two pieces today give you the bitter flavour of what is ahead for Australian exports. The first is a spot-on diatribe by Martin Feil at The Age. ACCORDING to many pundits and politicians, expanding the Australian services sector is the correct (if not the only) long-term strategic direction for the Australian economy. We have completely