Leith van Onselen


Auction clearances strong again

By Leith van Onselen Reported auction clearance rates in Australia’s two biggest markets were strong again over the weekend. In Australia’s biggest auction market – Melbourne – the preliminary clearance rate was 78% on 837 auctions reported to the REIV, although 72 auctions listed as “no result”, meaning there will likely be some downward revision


Links 23 September 2013

Global Macro / Markets: Jeremy Grantham, the chief investment strategist at GMO, warns investors about dwindling resources – Wall Street Journal How The Fed’s Bazooka Misfired: QE-Infinity Sends Experiment Awry – ZeroHedge Global Equity Funds Record Biggest Inflows Since 2005 – Bloomberg The Fed Has Investors Overjoyed, And It’s For All the Wrong Reasons –


Chris Joye: Only fools ignore bubble trouble

Chris Joye has followed-up on his fine work recently, with a stinging rebuke at the widespread complacency on display over the risk of an Australian housing bubble. From the AFR: Residential property is the biggest source of household wealth and underlies the most important asset – home loans – held by Australia’s colossal and concentrated


JP Morgan: Low rates won’t cause asset bubbles

By Leith van Onselen JP Morgan’s chief rates and currency strategist, John Normand, has today come out against the view that the record low interest rates globally are likely to lead to asset bubbles. From the AFR: JP Morgan head of foreign exchange and international rates strategy John Normand says record low interest rates, including


States must unite for GST reform

By Leith van Onselen Business Day’s Michael Pascoe has written an excellent article this afternoon arguing that the states must unite in order to drive GST reform: Barnett called for leadership on the GST issue from Tony Abbott, but it’s not the federal government that needs tax reform, let alone the political cost of broken


Chinese growth accelerating, but more unbalanced

By Leith van Onselen Capital Economics has today released its latest China Activity Proxy (CAP), which attempts to measure the pace of Chinese growth without relying on the official GDP figures, and is based on a set of five indicators chosen to reflect activity across a wide section of the economy. The August CAP shows


Economy-wide spending growth slows

By Leith van Onselen Commsec has today released its Bank Business Sales Indicator (BSI), which tracks the value of credit and debit card transactions processed through Commonwealth Bank merchant facilities, and covers spending broadly across the economy rather than just retail sales, including spending on automobiles, personal services and airlines. According to Commsec, the BSI


Abbott rules out changes to GST

By Leith van Onselen The new Coalition Government has today ruled out making any changes to the GST, contravening the wishes of the Western Australian and ACT leaders who have called for an increase in the tax. From the AFR:   “There will be no change to the GST, full stop, end of story,” a spokesman


When too much housing is bad for our health

By Leith van Onselen Over the past 24 hours, I have read a range of articles, both from Australian and abroad, arguing that the obsession with housing “investment” is sacrificing the economy’s potential by diverting too many scarce resources to what is, in the case of pre-existing housing at least, an unproductive investment. John Carney,


Aussie share market hits record high

By Leith van Onselen From Commsec comes news that the the All Ordinaries Accumulation index (AOAI) – arguably the best gauge to track the performance of the sharemarket since it measures total returns (both share prices and dividends) – hit a record high of 42,951 yesterday, up from the previous high of 42,946 set on


Are China’s ghost cities getting worse?

By Leith van Onselen China’s ghost cities, the most famous of which is Ordos in inner Mongolia, have regularly been cited as a prime example of China’s unsustainable construction-led economy. In 2009, AlJazeera posted an explosive video showcasing Ordos’ ghost apartments and frenetic pace of construction, which exemplified the “build it and they will come”


Older, but not wiser on housing

Cross-posted from Ross Elliott at The Pulse Australia has an ageing society and while living longer is good news for many, there are some major economic issues we need to understand to avert a huge problem in the years to come. According to a recent UN report, roughly half the children born in developed and


Construction booms, retail slides in ABS jobs report

By Leith van Onselen Commsec has released an interesting report summarising the quarterly employment report by the Australian Bureau of Statistics (ABS), which examines jobs growth by industry over the three months to August 2013. According to Commsec, total employment fell by a non-seasonally adjusted 26,500 workers over the August quarter – the biggest quarterly


A German election primer

Cross-posted from Kate McKenzie at FT Alphaville Something funny happened to the eurozone over summer. Things… began to look better. Of course, there are plenty of difficulties lying in wait. As the FT’s Peter Spiegel and Alex Barker write, once a new German government is in place after this weekend’s election, fraught negotiations about Greece,


Can Coles challenge the banks on mortgages?

Cross-posted from The Conversation The news that Coles may be seeking a banking licence would, if confirmed, put the supermarket group and its parent company Wesfarmers in direct competition with Australia’s major banks. It would allow Coles to offer its 18 million customers, savings accounts and mortgages. Coles is believed to already have an application


Weekly RP Data Australian house price update

By Leith van Onselen In the week ended 19 September 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, recorded a 0.80% rise, which was the fourth consecutive weekly increase (see next chart). Values rose in all major capitals except Perth and Brisbane (see next chart). Values


Links 20 September 2013

Global Macro / Markets: Policy makers have not tackled the causes of the crisis – Financial Times Satyajit Das: The Suzerainty of Central Bankers – Naked Capitalism Banking Without Risk Is Impossible – Bloomberg Druckenmiller: QE is biggest redistribution of wealth ever – optionmonster.com North America: 6 things you need to know about Janet Yellen


WA to sell family jewels to restore credit rating

By Leith van Onselen Following yesterday’s downgrading of Western Australia’s credit rating by Standard and Poor’s, the state government has announced that it will embark on a program of asset sales in a bid to shore-up the state’s finances and restore its credit rating back to AAA. From the Western Australian: Port assets are being


Coalition axes Climate Department

By Leith van Onselen It hasn’t taken long for the new Coalition Government to fulfill its election promise to disband the Climate Commission and sack its commissioners: The Coalition is delivering on an election promise to dispense with the commission, saving taxpayers $580,000 this financial year and $1.6 million in following years… “The Coalition believes


The US economy is addicted to stimulus

Cross-posted from Peter Schiff at Euro Pacific Capital The Fed’s failure today to announce some sort of tapering of its QE program, despite the consensus of an overwhelming percentage of economists who expected action, once again reveals the degree to which mainstream analysts have overestimated the strength of our current economy. The Fed understands, as


Manufacturing recession rolls on

By Leith van Onselen The apparent recession in the Manufacturing sector rolls on, with the release of the latest Westpac–ACCI Survey of Industrial Trends, which is the longest running business survey in Australia (dating back to 1966), revealing that economic conditions manufacturing deteriorated in the three months to September, with the Composite Index falling by


Is the Fed taper debate off the agenda for 2013?

From Elliott Clarke at Westpac comes the below neat summation of last night’s decision by the Federal Reserve not to wind-back (“taper”) its $US85 billion a month of bond purchases: Ahead of the September FOMC meeting, we maintained our position that the macroeconomic conditions apparent in the US economy did not warrant tapering. Specifically, despite


Productivity: the only way to raise living standards

By Leith van Onselen In early 2003, I joined the Australian Treasury where I was immediately introduced to the Department’s “Three P’s” framework, which effectively argued that Australia needed to: 1) boost productivity; 2) raise workforce participation; and 3) increase the population via skilled migration, if the nation was to continue to enjoy rising living


GM puts heat on Coalition over car subsidies

By Leith van Onselen General Motors Holden (GMH) has delivered a simple message to the new Coalition Government: commit to subsidising the Australian car industry within two months or we will follow Ford in ceasing production in Australia. From the AFR: Holden had promised it would keep its Adelaide manufacturing operations until 2022 under a $275 million


Fed delays QE taper citing economic risks

By Leith van Onselen Well that was an anti-climax. After months of speculation that the Federal Reserve would begin “tapering” (winding down) its $US85 billion monthly bond purchase program (known as “quantitative easing” or QE) at its September Federal Open Market Committee (FOMC) meeting, held overnight, it decided against acting. In choosing not to taper


Australia must look to Texas on housing policy

By Leith van Onselen The New Zealand Initiative last week released a brilliant new report entitled Different Places, Different Means: Why Some Countries Build More Than Others, which provides a comprehensive assessment of housing supply systems in four markets: Britain; Switzerland; Germany; and Texas. As argued by me many times before, the report describes Britain’s


Does who chairs the Fed really matter?

Cross-posted from The Conversation The surprising news that Larry Summers has withdrawn his bid to become the next chair of the US Federal Reserve has opened up the big question of who should lead America’s central bank. The new front runner is Janet Yellen, the Fed’s current vice chairwoman. Most commentators and economists seem to