Unconventional Economist


Tony Abbott: the situational Keynesian

Cross-posted from The Conversation Tony Abbott became prime minister on Saturday by promising to lead an adult government of competence and stability after years of Labor infighting and backflips. Policy details and bankable pledges were scarce on the ground, and voters apparently didn’t care. This was nowhere truer than on the issues that invariably shape


Taxi reforms watered down

By Leith van Onselen Back in June, I posted an article supporting proposed reforms by the Victorian Government to taxi licensing: A key factor behind the unreliability of the taxi industry across Australia is that taxi licences have been artificially restricted via government regulation. In the case of Melbourne, the overall number of licences has


HIA sees construction green shoots

By Leith van Onselen The Housing Industry Association (HIA) has today released an interesting report (below) examining the nascent recovery in dwelling approvals, which remains patchy, driven primarily by lower density housing and by New South Wales and Western Australia: Residential building approvals have embarked on what can best be described as a variable path


Charting the Australian first home buyer retreat

By Leith van Onselen Yesterday’s housing finance data, whilst strong overall, was once again concerning from the viewpoint that first home buyer (FHB) demand remains weak, despite nominal mortgage rates at near multi-decade lows. As shown below, the lion’s share of mortgage demand in Australia is currently being driven by investors and upgraders: Looking at


Construction finance continues to improve

Yesterday’s housing finance data for July, released by the Australian Bureau of Statistics (ABS), continued to point to an ongoing improvement in the new home market, with the total number of finance commitments for construction and new dwellings increasing by a seasonally adjusted 0.7% over July, 15.5% over the year and were tracking 13% above


Links 10 September 2013

Global Macro / Markets: Hedge Funds Cut Back on Fees – Wall Street Journal Why Have Markets Learned Nothing in the Last 50 Years? – Bloomberg The IMF knows that the Fed is playing with fire in emerging markets – The Telegraph North America: Taxpayers Turn U.S. Farmers Into Fat Cats With Subsidies – Bloomberg


Home equity: Australia’s growing wealth divide

Cross-posted from The Conversation For all our talk about housing affordability, few people want house prices to drop. That’s because most Australians are home owners, and much of our wealth is stored in housing. But recent figures released by the Australian Bureau of Statistics (ABS) suggest a growing divide between those enjoying the financial benefits


Investors blowtorch Australian Housing Finance

By Leith van Onselen The Australian Bureau of Statistics (ABS) has just released housing finance data for the month of July, which registered a seasonally-adjusted 2.4% increase in the number of owner-occupied finance commitments over the month. It was the seventh consecutive increase in owner-occupied commitments and beat analyst’s expectations of a 2.0% rise. The


The two sides of the consumer coin

By Leith van Onselen Last week’s national accounts for the June quarter, released by the Australian Bureau of Statistics (ABS), revealed that household financial consumption expenditure (HFCE) was a key driver of Australian GDP growth, increasing by 0.4% over the June quarter and contributing 0.2% of the growth in GDP. The result seemed to confound


Links 9 September 2013

Global Macro / Markets: Why Keynes wouldn’t have too rosy a view of our economic future – Washington Post Gorman Says Chance of Another Financial Crisis ‘Close to Zero’ – Bloomberg Squaring the circle – The Economist What’s Liquidity and Why Do We Need It? – Bloomberg North America: A Dearth of Investment in Young


NZ moves to unblock land supply

By Leith van Onselen Yesterday, New Zealand’s parliament passed new laws to free-up land supply and remove planning bottlenecks in a move aimed squarely at improving housing affordability: The Housing Accords and Special Housing Areas Bill passed its third reading in Parliament today 63 votes to 56 and will come into effect Monday 16 September. “This


HSBC, Commsec summon the confidence fairy

By Leith van Onselen Both HSBC and Commsec have come out with notes today predicting a boost to confidence and the economy should tomorrow’s election culminate in a clear mandate for Government. First, HSBC: Overall, the two major parties are not announcing wholesale changes to the economic or regulatory landscape in the near-term. As such,


Bill Evans dissects the Australian economy

By Leith van Onselen Above is an interesting extended interview with Westpac’s chief economist, Bill Evans, aired last night on ABC’s The Business. In the interview, Evans provides his views on the post-mining boom economy, including his outlook for interest rates, the currency, and house prices. Key points include: June’s capital expenditure (capex) data was


Links 6 September 2013

Global Macro / Markets: The $5.3 Trillion a Day Currencies Market: 5 Things You Need to Know – Wall Street Journal The Path to Electronic Money as a Monetary System – Supply-Side Liberal U.S. stimulus pullback dominates G20 economy talks – Reuters The Next Emerging Market Crisis – New York Times North America: Fed nomination


Coalition cuts aid Budget to achieve savings

By Leith van Onselen The Coalition has today released its second tranche of pre-election costings (table here), which follows the $31 billion of savings announced previously. According to the document, the Coalition would achieve an additional $9 billion of savings, half of which would come from reducing the foreign aid budget. From the AFR: “Together


Where is the long-term vision?

Cross-posted from The Conversation Australia’s 2013 election campaign is noteworthy not just for the ferocity of the party leaders’ exchanges on tax and policy costings but also for the corresponding absence of any substantial debate on competing visions of our economic future. As Nobel prize winning economist Professor Joe Stiglitz observed earlier in the week:


Empty shops spread

By Leith van Onselen Back in July, I argued that Australia’s retailers needed to become accustomed to a low growth future as the twin credit and mining booms unwind: …real retail sales growth per capita has essentially flat-lined since December 2007, following two decades of strong growth (see next chart). There are strong reasons to


Australian trade balance shifted into deficit in July

By Leith van Onselen The Australian Bureau of Statistics (ABS) has released trade data for the month of July, with Australia recording a seasonally-adjusted trade deficit of $765 million. The result disappointed analysts’ expectations, which had expected a trade surplus of $100 million. It was the first monthly trade deficit in three months and followed