Unconventional Economist

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Weekend Reading 26-27 May 2018

Global Macro / Markets / Investing: U.S. Launches Criminal Probe into Bitcoin Price Manipulation – Bloomberg About $1.2 billion in cryptocurrency stolen since 2017: cybercrime… – Reuters The declining share of manufacturing jobs – VOX Elon Musk Is Gaslighting Us – Slate Tesla’s Model 3: You’re Going To Need A Bigger Parking Lot – Seeking

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Why homelessness is getting worse

By Leith van Onselen The ABC has released a report explaining why Australian homelessness is getting worse: Australia’s homelessness figures are going in the wrong direction, and housing experts warn we’re about to recommit to a failing policy. Last month’s census data revealed that after a long period of stability, homelessness in Australia has gone

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Anatomy of an Auckland housing disaster

By Leith van Onselen You know Auckland’s housing market has hit peak stupid when despite a near record high average dwelling price of $1.05 million: And rampaging population growth: We are being told that Auckland’s dwelling values must continue to rise otherwise developers will go bust: House prices and those of commercial property projects will

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Leith van Onselen talks mass immigration on 2GB Radio

This morning I was interviewed by Radio 2GB’s Luke Grant discussing Labor Leader, Luke Foley’s, regrettable comments yesterday about “white flight” from Sydney owing to an influx of refugees (which I demolished yesterday). I also slam mainstream economists infatuation with endless growth, as well as the lunacy of recent calls to increase Australia’s immigration intake

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Another contractor lines up to sue Sydney’s Light Rail farce

By Leith van Onselen The infrastructure being built to fix the problems caused by mass immigration continues to pile on the pain for taxpayers in Queen Lucy Turnbull’s Sydney. Hot on the heels of Spanish contractor Acciona demanding an additional $200 million from taxpayers as compensation for delays caused by the NSW State Government relating to the Sydney

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Coalition painted into corner on company tax cuts

By Leith van Onselen Th AFR’s Phillip Coorey has done a good job describing the conundrum facing the Turnbull Government with respect to its company tax cut policy: Inevitably, in the wake of this week’s events, there are murmurs among the Nationals and some others on the backbench to dump the cuts rather than fight

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Links 25 May 2018

Global Macro / Markets / Investing: Goldman Sachs made a staggering $200 million in one day as markets plunged – CNBC Netflix Is Now Worth More Than Comcast – Bloomberg The ‘suprasecular’ stagnation – VOX Here’s How Much Money You Need for Bankers to Think You’re Rich – Bloomberg M&A frenzy stokes fear of market

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Airbnb delivers Melbourne party-towers!

By Leith van Onselen Another report has emerged about the conversion of Melbourne’s rental stock to short-term Airbnb holiday rentals: A new shimmering 63-storey, $300 million skyscraper that was meant to provide private residential accommodation to Melbourne’s booming inner city population has instead become a quasi-hotel with dozens of rooms listed by owners and investors

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Land-use restrictions drive-up Canadian housing costs

By Leith van Onselen The CD Howe Institute has released a new study on how excessive land-use restrictions and planning barriers are driving up the cost of Canadian housing: In any competitive market without barriers to entry, regardless of the product being sold, the overall market price should equal its marginal cost of production. The

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Why won’t Labor commit to raising Newstart?

By Leith van Onselen The chorus calling for a lift in Australia’s pathetically low Newstart Allowance for unemployed workers (the ‘dole’) is getting too loud to ignore. In recent times, we have witnessed a huge cross-section of industry groups and commentators calling for Newstart to be lifted, including: Deloitte Access Economics senior partner Chris Richardson;

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MSM pushes company tax cut suicide on Coalition

By Leith van Onselen With the Turnbull Government’s company tax cut package seemingly dead in the water after One Nation’s rejection in the Senate, and Coalition MPs questioning the political merits of pursuing the policy, both The AFR and The Australian have launched rear guard actions backing the package. The AFR has taken direct aim

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Coalition’s income tax cuts to cost Budget $144 billion

By Leith van Onselen Treasurer Scott Morrison has finally revealed that the Federal Government’s three-stage personal income tax package will cost $143.95 billion in total over a decade, with the first two stages to cost $102.35 billion. The tax bill was passed by the House of Representatives yesterday, although it is likely to face an

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Why won’t Adani die?

By Leith van Onselen It’s a question I have often pondered. With the Turnbull Government confirming that the Adani Carmichael coal mine will not receive NAIF funding, Australia’s largest rail freight company – Aurizon – stating that it will withdraw its application for a federal government loan to build the rail corridor, as well as

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Macroprudential 3.0 takes aim at Sydney and Melbourne property

By Leith van Onselen Last month, UBS released damning analysis of Westpac’s mortgage sample from the Royal Commission, which revealed that ‘liar loans’ are prevalent among its $400 billion mortgage book, and that 35% of Westpac’s sample loans had Debt-to-Income ratios above 7 times: Now, in the wake of the Australian Prudential Regulatory Authority’s (APRA) recent

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Amid mass automation, why persist with mass immigration?

By Leith van Onselen The International Monetary Fund has produced dystopian analysis warning of a possible future of work dominated by machines, leading to falling wages, rising unemployment, and worsening inequality. From The ABC: The research looked at a variety of scenarios ranging from modest substitution of labour by robots and artificial intelligence to a

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Australia tops OECD for insecure work

By Leith van Onselen One of the most striking trends that has developed across the Australian economy over recent decades has been the sharp lift in temporary employment, as illustrated by the following chart: Whereas there were 5.5 full-time workers for every part-time worker 40 years ago, today there are just 2.2 full-time workers for every

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Restrictive zoning blamed for Adelaide’s expensive housing

By Leith van Onselen Flinders University has released research claiming that planning rules banning the construction of multi-unit flats has contributed to Adelaide’s lack of affordable housing. From Adelaide Now: Flinders University research has found that zoning regulations that prevented building of multi-level flats and townhouses by implementing minimum home sizes — in part due to

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Links 24 May 2018

Global Macro / Markets / Investing: How Politicians Intensify Financial Cycles: 300 Years of Pro-Cyclical Regulation – Pro Market Why Investor Behaviour Makes Momentum Strategies Outperform – Seeking Alpha Bitcoin Could Be a Problem for U.S. Security Clearances – Bloomberg Financial Crisis May Have Hit ’80s Generation the Hardest – WSJ The Old Allure of

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Immigration Dept head confirms migrants have taken most new jobs

By Leith van Onselen Last month’s joint Treasury/Department of Home Affairs propaganda report, Shaping a Nation, confirmed what many of us already knew: that most new jobs created have gone to migrants: Recent migrants accounted for two-thirds (64.5 per cent) of the approximately 850,000 net jobs created in the past five years. For full-time employment, the

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Constructivity activity flat in Q1, misses expectations

By Leith van Onselen The ABS has released data on the value of construction work done for the March quarter of 2018, which registered a tiny 0.2% seasonally-adjusted rise in total construction activity over the quarter but a 5.0% increase over the year: The result missed analysts expectations of a 1.3% increase in construction activity

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Paul Keating dazed and confused on superannuation

By Leith van Onselen The architect of Australia’s compulsory superannuation system has urged the federal government to raise Australia’s superannuation guarantee (i.e. compulsory superannuation contributions) from 9.5% to 12%, claiming it would compensate workers for productivity gains during a period of low wages growth. From The AFR: Australia’s business community should back an immediate superannuation

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Berejiklian the housing liar lets Airbnb run riot

By Leith van Onselen Upon taking over as Premier of NSW in late 2016, Gladys Berejiklian labelled the housing affordability crisis as “the biggest issue people have across the state” and vowed to tackle it. However, rather than implementing concrete measures, the subsequent State Budget instead offered fake stamp duty concessions to first home buyers (FHBs),

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Turnbull Government hides record immigration in bridging visas

By Leith van Onselen Appearing on 3AW’s Neil Mitchell program earlier this month, Prime Minister Malcolm Turnbull claimed that the Government will this year reduce the non-humanitarian permanent migration intake to “somewhere between 170,000 and 180,000”, from 184,000 in 2016-17: Yesterday, The ABC revealed that while modest cuts to the permanent migrant intake have been made,

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What Malcolm should do with his company tax cuts now

By Leith van Onselen After Pauline Hanson’s latest rejection of the Turnbull Government’s company tax cut package handed the Coalition another opportunity to walk away, it has instead doubled-down: “The government will persist with our plan, which is central to our plan for a stronger economy and more jobs,” Senator Cormann said on Tuesday morning.

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ABA/Canstar shows a sluggish mortgage market

By Leith van Onselen ABA/Canstar has released its housing finance data for the five major banks (covering 85% of lenders) to April 2018, with trend annual rises registered in both the number and value of housing finance commitments (excluding refinancings), but sluggish growth overall: As shown above, the annual number of finance commitments is still tracking

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Easing birth limits won’t cure China’s demographic woes

By Leith van Onselen I have noted previously how China’s economy is facing stiff headwinds from an ageing population (see here, here, here, and here). Essentially, China’s ageing problem stems from its ‘one child policy’, which was brought into effect in the early-1970s and is credited with preventing around 400 million births from 1979 to