Unconventional Economist

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Links 15 March 2013

Global Macro/Markets: Private equity crash could trigger next wave of financial crisis, Bank warns – The Guardian Sentiment Getting Frothy – The Big Picture Bullish Sentiment Surges by Most Since 2010 – Pragmatic Capitalism North America: Population ageing hits US counties – Huffington Post Only Wall Street Wins in Detroit Crisis Reaping $474 Million Fee

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The UK eats its young

By Leith van Onselen Earlier this month, I talked about the coming inter-generational war, whereby the ageing of the population and increasing transfer and welfare payments to the elderly (paid for by a declining tax base of younger people) threatens to permanently constrain global economies and create an inter-generational war between asset rich (and lowly

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AFG has biggest Feb mortgage sales on record

By Leith van Onselen Australian Finance Group (AFG) yesterday released its housing finance data for the month of February, which registered the Group’s strongest February mortgage sales on record, with 7,480 finance commitments (valued at $2,956 million) over the month, an improvement of 6.9% on the previous high set in February 2012 (see next chart).

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New home finance continues to recover

By Leith van Onselen Yesterday’s housing finance data for January, released by the Australian Bureau of Statistics (ABS), contained some good news with the number of finance commitments for new dwellings and construction increasing by a seasonally-adjusted 0.6% over the month and by 9.3% higher over the year, to be tracking just above the 5-year

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Links 14 March 2013

Global Macro/Markets: Government Debt and Deficits Are Not the Problem. Private Debt Is – New Economic Perspectives World shale production is potentially on a scale to change energy balance for the first time since 1970s – Business Spectator ‘Capital’ requirements for banks. What’s the beef? Untangling the obfuscation of bankers – Prime Economics Value investing

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Housing finance falls again on FHBs

The Australian Bureau of Statistics (ABS) has just released housing finance data for the month of January, which registered a seasonally-adjusted -1.5% decrease in the number of owner-occupied finance commitments over the month. Analyst’s had expected growth of 0.2% over the month. December’s results were also revised downward. Arguably, the most important figure in the

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Construction industry to contract

By Leith van Onselen From Property Observer today comes the latest forecasts from BCI Media Group forecasting a weak outlook for construction activity across Australia: The construction industry is forecast to contract 4% over the three months to May 2013, according to short-term forecasts from the BCI Media Group. BCI is forecasting $15.6 billion in

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Japan discovers new gas source

By Leith van Onselen Following on from FT Alphaville’s post on China’s efforts to extract natural gas from shale rock formations, it appears that Japan has now discovered big gas reserves in waters adjoining the Japanese coastline. From The Telegraph: Japan has extracted natural “ice” gas from methane hydrates beneath the sea off its coasts

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NZ reinflates its property bubble

By Leith van Onselen Yesterday, the Real Estate Institute of New Zealand (REINZ) released its house price indices for the month of February 2013, which revealed an ongoing strengthening of housing prices across the country. The growth of median stratified house prices across New Zealand strengthened to 8.1% in the year to February, with Auckland

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Links 13 March 2013

Global Macro/Markets: Gold is the worst investment of 2013 – Quartz Fiscal austerity is bad – there are no qualifications – Bill Mitchell North America: America’s fiscal drag – Economonitor Paul Ryan: The GOP Plan to Balance the Budget by 2023 – Wall Street Journal Prosecuting Big Banks Not Always the Best Choice – New

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UK households are getting squeezed

By Leith van Onselen Tullet Preborn recently released its new essentials index, which attempts to measure the real cost of living in the UK. The report paints a grim picture for UK households, which appear to be getting squeezed by falling real incomes and rising living costs. Below are the key charts and analysis from

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Is the China recovery real?

By Leith van Onselen Above is an interesting segment on CNBC’s Squawk Box discussing the latest Chinese economic data and whether the recovery underway is based on solid foundations. The segment features an interview with Patrick Chovanec, former Associate Professor at Tsinghua University’s School of Economics and Management in Beijing and Chief Strategist at Silvercrest

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Weekly RP Data housing market update

By Leith van Onselen Please find above RP Data’s March housing market update, which covers the state-of-play of the housing market as at end-February 2013. And below is RP Data’s weekly housing update, which provides a neat summary of weekly housing market activity to 10 March 2013, including the latest readings from RP Data’s two

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Should we mimic the Swedes?

Cross-posted from Gareth Vaughan at Interest.co.nz comes the below discussion on Sweden’s loan-to-value (LVR) restrictions on mortgage lending, which were implemented in October 2010, and are expected to be tightened further along with bank capital adequacy requirements. While the article looks at Sweden from a New Zealand perspective, Australia and New Zealand share essentially the

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NZ mortgage war heats up

By Leith van Onselen The competition for mortgage lending is heating up in New Zealand. Last month, government-owned KiwiBank announced that it would drop its six month fixed mortgage rate to just 4.79%, which is reportedly the lowest mortgage rate offered by a New Zealand bank for “many decades”. And today, ASB (owned by the

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NZ minister vows to smash growth boundary

By Leith van Onselen I have written previously how in New Zealand’s largest city – Auckland – the Council had moved to tighten the city’s already highly restrictive urban growth boundary (called the “Metropolitan Urban Limit” or MUL) into an even tighter “Rural Urban Boundary” that would effectively ban development outside of the rural-urban line

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Victorian transfers and mortgages contract

By Leith van Onselen The Victorian Department of Sustainability & Environment (DSE) released transfer and mortgage data for the month of February, which revealed resurgent weakness in the number of housing transfers and finance commitments. First, the below chart shows the number of housing transfers on a monthly and 3-month moving average basis (3MMA): And

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Prosper responds to land banking developers

By Leith van Onselen Following of from yesterday’s claim by Australand that Prosper had exaggerated the extent of its residential land bank, Prosper has responded with the below media release, sourced from ASX company reports, providing an update of land banks held by Australia’s listed property developers: Listed Developer Englobo Holdings 8 March 2013 Prosper

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Weekly RP Data house price update

By Leith van Onselen In the week ended 7 March 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, recorded a huge 0.67% increase, which followed last week’s 0.31% increase. This week’s rise was the strongest in well over a year (see next chart). Value gains were

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The great baby boomer sell-off

By Leith van Onselen Quartz yesterday published an interesting article on the “great baby boomer sell-off” in the US, which it argues will kick-off later this decade and potentially cause the next housing crisis: In the 20 years between 1990 and 2010, these consumers were at their peak family size and peak income. And suddenly,

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Bogan exodus hits record annual high

By Leith van Onselen News has worsened slightly for Australia’s tourism industry in January, with yesterday’s release of the overseas short-term arrivals and departures figures showing a solid fall in the number of inbound tourists. The number of short-term visitor arrivals decreased by a seasonally-adjusted -2.3% in January, which more than offset the -0.8% reduction

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The one trick pony

By Leith van Onselen It’s been said before but the release of the January international trade data yesterday by the Australian Bureau of Statistics (ABS) underlined again a worrying concentration of Australian exports into one market, from one state, and one commodity. According to this data, the share of total exports to China hit an

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Australia’s trade figures deteriorate

By Leith van Onselen The Australian Bureau of Statistics (ABS) has just released trade data for the month of January, with Australia’s trade deficit increasing to a seasonally-adjusted $1,057 million, from $688 million in December (revised upwards from $427 million). It was the thirteenth consecutive month that Australia has recorded a monthly trade deficit (see