David Llewellyn-Smith


Wikileaks in our trousers

The extraordinary material on display in the Fairfax papers today from Wikileaks rips a hole in the seam of what this blogger has consistently described as the “Great Straddle”: The national interest divergence that Australian leaders have allowed to develop between our strategic imperatives with the United States and our economic imperatives with China. This


Links December 8: Assange’s war

Julian Assange speaks. The Australian.And Wikileaks to the Herald devastate Rudd. SMHThen Beazley in The Age.Assange arrested. SMH Which looks like poor politics. Poll, PollChina fallout. John Garnaut Good news, bad news on US austerity. The EconomistUS rail volumes down. Money Game, Calculated RiskNo answers for Europe. Gideon RachmanIn: Ireland. Out: Spain, Portgual, Italy, Belgium,


Links December 7: The new bubble

Europe’s ponzi mechanism. VOXEuropean wrap-up. EurointelligenceEuro to fall. BloombergOut: Ireland, Portugal, Spain, Italy, Belgium, GreeceUS bank failures. Calculated RiskChina’s listed commune.AsiaOneAustralia’s low inflation history. Henry ThorntonIndian iron ore exports still stuck. MineWebScramble for coal. The OzMore ore. SteelOrbisMajor metals 2011 forecasts. Australian Mining


Mind the gap

The great foreign policy analyst, Coral Bell, has often described in public how there is always a gap between a countries’ declared foreign policy and its actual policy. That is what one half of diplomacy is all about: Maintaining the gap. Hence the 17th century adage attributed to Sir Henry Wotton that ‘an ambassador is


Links December 6: The Great Straddle

Wikileaks on Rudd. John GarnautBank reform released Wednesday. Peter MartinSFW please. GittinsIrish default. IndependentHouseless, cold, lonely, persecuted. Financial AramggedonGlobal ubermencsh II. Baseline ScenarioWeek ahead for the DOW. Calculated Risk2011 China rate rises official. NYTISM not all good. PragCapVale’s plan. BusinessWeek


More bank reform leaks

From the SMH today: Treasurer Wayne Swan will this week unveil his long-awaited package of measures to rein in the banks and boost competition in the sector. A senior Labor source confirmed Mr Swan would present his reform package to cabinet when it meets tomorrow. He will then make final adjustments to the package, which


More reading…

How to leave the euro. The Economist2011 markets. FTChinese inflation. Doug Noland Return of the vigilantes. FTUS unemployment, the ugly graph. Calculated RiskETF madness drives JPM copper squeeze. Zero HedgeHugh Hendry on global macro. Zero Hedge


Weekend reading: US not

What happens to big houses after the crash? FOXNo FDR. Krugman, Palley (h/t nakedcapitalism)US’ very disappointing employment report. Calculated RiskThe job creation needed for recovery. Zero HedgeGold signals QEIII. KitcoBob Janjuah’s yeah right. Zero HedgeNew Glass-Steagall. Thomas HoenigRemember ForeclosureGate? EuromoneyGlobal übermenschBaseline ScenarioTrichet fights. Gavyn DaviesECB splinches vigilantes. Zero HedgeIreland, Portugal squeezed. Greece, Spain, Belgium in


Will EQE weaken the euro?

The FT has an interesting take on whether or not EQE would weaken the euro, a key contention by this blogger in its assessment that the Aussie dollar is headed for weakness. Let’s take a look: Silver denarii were often debased by mixing in lesser metals when the Roman emperor needed more money to raise


Witching hour

Banking Day reports that the witching hour for bank reform is upon us: Momentum may be reaching a peak over the federal government’s activist policy package on banking, with talk of an announcement by the Treasurer, Wayne Swan, this Sunday. Speculation over the contents of the policy plan is centring on a widening of the


Miraculous correction

A few weeks ago this blog pronounced in the post ‘Pricing the miracle commodity’ that: … the contract price for Rio is currently hovering in the high $150s per tonne and BHP slightly below that. Looking at the current quarter (Q4) for clues to contract pricing for next (Q1), to date the average price in


Links December 3: ‘Tis the season…

All in. Greece, Spain, Ireland, Portugal, Italy, even poor BelgiumMetals Party. BarchartCoal to soar on weather. The OZUS pending home sales rise. Calculated RiskUpside surprise for US jobs? Barry RitholzChinese leading indicators soft. Zero HedgeEuropean bond crisis vs Asian financial crisis. Baseline ScenarioNegative gearing exposed again. The Unconventional EconomistDeep T.’s crusade. Delusional Economics



There’s a war going on in Canberra. It’s being fought between the Reserve Bank of Australia on one side and the Treasury allied with the government on the other. This blogger has no special leak to offer, nor insight from the generals that are directing the battle, but the war is now out in the


The fifth pillar

Australia’s best business journalist, Adele Ferguson, has a scoop today on what the government’s new competition measures will look like. From the SMH: Wayne Swan is poised to unveil controversial measures to create a fifth pillar of the banking system using the muscle of the $73 billion credit union and building society industry. It is


Well, glad that’s over

It’s all ‘risk oooaaarrrrn’. And this blogger doesn’t buy it. EQE can’t save the euro. It can only devalue it. That stuffs the current macro settings for reflation and sooner rather than later the markets will realise it. The US recovery cannot carry the world without a falling dollar even given it’s slow strengthening. Moreover,


Links December 2: EQE rally

Here comes EQE. FTOr massive IMF pool. Zero HedgeWhat’s wrong with poor old Belgium? Spreads widen. All else in.Clear macro weaknesses. Martin WolfIreland the rise & crash. NYRB (h/t nakedcapitalism)Politics to kill Europe. Michael Pettis, Barry Eichengreen, Yves SmithUS bond bubble bust. MarketWatchFinancialisation of commodities. VOXThe fifth pillar. SMH Australia’s shitty growth. Tim Colebatch (h/t


The Six Million Dollar Central Bank

This blog delivered the RBA a bit a of a serve for inconsistency late last week after the boffins’ appearance in Parliament. Having read the hansard, however, what is also obvious is just how much the RBA is rebuilding itself from the ruins of the crashed debt pilots of yesteryear. Let’s take a look. Gone


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


No wood, all trees…

According to Banking Day: In a speech to a Finsia financial services conference, [RBA boffin Luci] Ellis argued that far from being complacent about a bubble, the RBA was searching for danger signs. But, she said, it was important to go beyond statistical averages to understand the housing market. As an example, she set out


Unpleasant scenarios

The blowoff in gold and oil must mean that we are rapidly approaching the zenith of this charming QE2 rally, which has morphed swiftly into outright currency war. Helicopter Ben is now completely boxed in by the stock market which has rightly interpreted his Jackson Hole pledge to print money “if” needed as a rock


Housing velocity

Population growth is often cited as a causal factor in the overvaluation of Australian real estate. And indeed, strong population growth is a factor, particularly in recent years when housing starts have diminished, most especially in NSW. But one infrequently quoted housing statistic that calls into question the strength of population growth causation is what


Is Aussie Mac real?

Robert Gottliebsen today takes on government guarantees of Australian banks. It is more than welcome that this topic gets greater public scrutiny. It is nothing short of bizarre that the very foundation upon which Australian banks operate has shifted and yet we carry on as if nothing has changed. Nonetheless, there are a series of


Cliff or plateau?

This week saw the release of the RBA’s June credit aggregates, as well as the first concrete evidence that house prices are rolling over from RPData. Neither was terrifying but neither also was reassuring. As usual, the mainstream media offered up a plate of bullish slop, preferring to quote quarterly growth figures over the much