Houses and Holes

5

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

5

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.

8

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

0

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

6

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

0

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.

2

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

3

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,

0

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;

4

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

2

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

3

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

0

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

2

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

3

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

2

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

0

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

4

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

2

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

0

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:

2

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

0

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.

3

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

0

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.

0

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.

1

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

3

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

4

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

1

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

4

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