Leith van Onselen


Is US GDP growth to be believed?

Cross-posted from Peter Schiff at Euro Pacific Capital Albert Einstein, a man who knew a thing or two about celestial mechanics, supposedly once called compound interest “the most powerful force in the universe.” While the remark was likely meant to be funny (astrophysicists can be hilarious), it sheds light on the often overlooked fact that


Where have the first home buyers gone?

Westpac has released an interesting report (below) examining why first home buyer (FHB) demand is so weak, which appears to be driven primarily by “the ‘shadow effect’ of earlier pull-forwards in activity associated with changes in government assistance [which] have effectively depleted the pipeline of potential FHBs [and] could take over a year to rebuild”.


HIA calls for supply-side reform

By Leith van Onselen The Housing Industry Association (HIA) has today released a paper examining the role and performance of residential construction during economic downturns and recoveries, namely: A: The early 1980s B: The early 1990s C: The introduction of the GST [mid 2000] D: The Global Financial Crisis [from 2008] The early-1980s: Prior to


Is Asia on the brink of another financial crisis?

By Leith van Onselen Above is another interesting segment aired last night on ABC’s The Business, examining whether Asia is on the brink of another financial crisis. According to the segment: $US85 billion of funds per month have been pumped into markets via the Federal Reserve’s quantitative easing (QE) program, and with markets now fearing


Bill Evans gives his outlook on rates, QE tapering

Below is the latest commentary from Westpac’s chief economist, Bill Evans, examining the latest minutes from the Reserve Bank of Australia (RBA) and questioning whether the US Federal Reserve will taper its quantitative easing as expected by the market from September. On Australia, Evans believes the RBA is not yet done lowering interest rates: The


Real Estate agents cash in on rising sales

By Leith van Onselen From RP Data’s Cameron Kusher comes the below report examining the increase in housing transaction volumes and prices, and what it means for real estate agents and brokers: …the beneficiaries of rising home values and a jump in sales volumes will be agents and brokers with those located in Sydney the


The great land price inflation

Cross-posted from David Collyer at Prosper Young academic Philip Soos has developed a unique Australian property database that allows us to inspect the entrails from many angles and in detail. Some data dates from as early as the mid-1800’s. We owe him thanks for this selfless public service. You can access his spreadsheets here. There


Links 23 August 2013

Global Macro/Markets: Mom-and-pop investors are leading the summer stampede out of emerging markets. – Wall Street Journal Central banks emergency reserves drop by $81bn – Financial Times Generation B (For Bubble) – New York Times North America: Markit Flash U.S. Manufacturing PMI at 53.9 in August (five-month high) – Markit Unemployment is very low in


What construction bounce?

By Leith van Onselen As noted by Houses & Holes earlier, UBS has today come out with a note upgrading its housing forecasts. It now expects 10% price growth this calendar year and 5% the next, as well as the following pick-up in dwelling construction: In this detailed note we reiterate our forecast for dwelling


Rise of the bullshit job

By Leith van Onselen Back in the early-1930s, renowned economist, John Maynard Keynes, predicted that technical innovations and rising productivity would mean that advanced country workers would be able to work only 15 hours and still enjoy rising living standards. In a highly amusing, but also somewhat depressing article in Strike! Magazine, David Graeber asks


BHP steels itself for the post-boom future

Cross-posted from The Conversation What are investors who buy BHP Billiton shares buying into? BHP shares are a bet on two things. First, commodity prices and especially the price of iron ore, hydrocarbons and copper. Second, the ability of BHP management to execute their strategy by continually reducing production costs and developing new projects through


Why won’t the RBA follow the NZ’s LVR lead?

By Leith van Onselen In December last year, the Reserve Bank of Australia (RBA) released a paper entitled Taming the Real Estate Beast: The Effects of Monetary and Macroprudential Policies on Housing Prices and Credit, which examined macroprudential policy actions in 57 economies taken over the past 30 years, and combined this data with time


The immigrant nation

Cross-posted from Ross Elliott at The Pulse. Australia’s history is one of immigration. Many came, ironically given the current political debate, by boats. As the debate over illegal immigration swirls, it’s maybe timely to remind ourselves how we all got here in the first place. Before anyone gets a head of steam up, you shouldn’t


Debate rages over RBNZ’s LVR cap

By Leith van Onselen Debate over the likely impact and merits of the Reserve Bank of New Zealand’s (RBNZ) speed limits on high loan-to-value (LVR) mortgage lending continues, with Fitch Ratings Agency arguing that the reforms will have limited impact on overall mortgage demand and house prices, but should help improve financial stability by lessening


Building suppliers warn on housing recovery

By Leith van Onselen Australia’s building products manufacturers have come out today warning that the hoped-for recovery in housing construction required to fill the void left as the housing boom unwinds is proving patchy. From the AFR: Boral, Fletcher Building, CSR and Adelaide Brighton have been forced to cut thousands of jobs, close plants, write


Links 22 August 2013

Global Macro/Markets: Where is 2014 Earnings Growth Coming From? – Avondale Asset Management Rising Markets Batter Short Sellers – Wall Street Journal North America: FRB: FOMC Minutes, July 30-31, 2013 – Federal Reserve Key Passages From Fed Minutes – Wall Street Journal Abandoned Dogs Roam Detroit in Packs as Humans Dwindle – Bloomberg Why the


Australia’s China dependence hits record

By Leith van Onselen The Australian Financial Review has just posted an article examining Australia’s extreme dependence on the Chinese economy: Australia has become more reliant on China as a buyer of its exports than any other trading partner in the last 63 years, surpassing even the dependence on Britain after World War II… Not


AMWU launches clever election video

By Leith van Onselen The Australian Manufacturing Workers Union (AMWU) has today launched the above video on its Make Australia website showcasing the wide range of inventions from Australia over its history. I’ll admit that I was surprised by the list, which was far more comprehensive than I had imagined. The video’s underlying message is


Household net worth dominated by housing

By Leith van Onselen The Australian Bureau of Statistics (ABS) has today released its biennial Household Wealth and Wealth Distribution Survey, which covers the two years to 2011-12. According to the Survey, real median and mean household wealth fell over the two year period, most likely reflecting the fall in housing values, which are by


Chris Richardson talks public finances

By Leith van Onselen Above is an interesting interview on Switzer TV with Chris Richardson from Deloitte Access Economics discussing the outlook for the Federal Budget. According to Richardson: Australia should have stronger public finances in the wake of the once-in-a-century commodity boom. Spending problems go back more than a decade. Both sides took a


The pros and cons of macroprudential

By Leith van Onselen Following on from Houses & Holes’ earlier post summarising Reserve Bank of New Zealand (RBNZ) modelling showing a potential 4% hit to house prices arising from its speed limit on high loan-to-value ratio (LVR) lending, above is an interesting short video of Interest.co.nz’s Gareth Vaughan explaining the changes and some of


Decades of deficits unless savings are found

By Leith van Onselen The Australian Newspaper today has provided a useful breakdown of longer-term major spending commitments by both major parties – i.e. commitments beyond the Budget’s current forward estimates: As you can see above, the Coalition has promised nearly $89 billion in commitments between 2017-18 to 2020-21, requiring more than $20 billion of


New home buyers: the forgotten people

Cross-posted from Ross Elliott at The Pulse. Sir Robert Menzies wrote his speech ‘the forgotten people’ about middle class Australia in 1942. Much of it remains relevant today, especially for the generation of new housing buyers who seem increasingly disregarded in public policy debates. It occurred to me recently that with all the various lobby


Links 21 August 2013

Global Macro/Markets:  A Field Guide to Stock Market Corrections – The Reformed Broker Low-volatility ETFs may not be what they used to be – CBS News The bond market’s fear of Summers – Reuters Pop Goes The Bond Market – chartianity.wordpress.com North America:  Why the White House is uneasy with picking Janet Yellen – Washington


New blow to Barnett’s onshore LNG push

By Leith van Onselen The Western Australian Premier, Colin Barnett’s, hope of having the proposed Browse liquified natural gas (LNG) project developed onshore rather than via an offshore floating LNG facility has today been dealt a significant blow with lead proponent Woodside recommending a floating offshore project to its joint venture partners. From the Australian:


Is the US shale gas boom running out of steam?

By Leith van Onselen From Bloomberg comes the above video report on the heavy losses being experienced by US shale gas producers as oversupply hits profits following a spending spree to expand the industry. According to the report, companies have spent $US460 billion on shale gas investment, which has led to a massive oversupply and


Is the Eurozone crisis over?

Cross-posted from The Conversation Finally good news from the Eurozone! According to recent Eurostat estimates the combined economy of this troubled region grew by 0.3% in the second quarter of 2013 after shrinking for six subsequent quarters in a row. But closer inspections show that the region is still facing deep problems. A sustainable improvement


RBNZ launches limits on high risk mortgages

By Leith van Onselen Just in, the Reserve Bank of New Zealand (RBNZ) has officially launched speed limits on high loan-to-value ratio (LVR) mortgage lending, effective from 1 October 2013. From the RBNZ website: Reserve Bank Governor Graeme Wheeler today announced that from 1 October banks will be subject to restrictions on high loan-to-value ratio