Unconventional Economist


Can China avoid the middle-income trap?

  The World Bank has just released its detailed report (below), China 2030: Building a Modern, Harmonious, and Creative High-Income Society, which seeks to answer the questions: Can China’s growth rate still be among the highest in the world even if it slows from its current pace? And can it maintain this rapid growth with


Canada’s bubble goes mainstream

By Leith van Onselen Friday’s article, Canadian Bubble Trouble, noted how the mainstream media (MSM) appeared to be turning from cheerleaders of the rapid rise in Canadian house prices to warning of a possible bubble and/or projecting falling housing prices. Over the past few days, the Canadian MSM appears to be shifting into overdrive, headlined


Australia’s FIRE economy burns

Friday’s Reserve Bank of Australia (RBA) testimony to the House of Representatives Standing Committee on Economics contained some interesting discussion on how the household savings rates of around 10% is the “new normal” and likely to persist well into the future: Mr Stevens: There is no particular science to saying, ‘What is the correct rate


Michael Pettis on reforming China

This morning, Bernard Hickey at Interest.co.nz linked an interesting article from Michael Pettis, professor of finance at Peking University, entitled: When will China emerge from the global crisis? It’s a long and wide-ranging article in which Pettis discusses the growing debate within China about industry structure, the move to free markets, growing inequalities, and economic


Canadian bubble trouble

By Leith van Onselen In the years following the global financial crisis (GFC), the Canadian and Australian housing markets were among the best performing in the English-speaking world. While housing markets in other English-speaking nations- most notably the United States, Ireland, the United Kingdom, and New Zealand – remained in a funk, Canada’s and Australia’s


Two speed wages

The Australian Bureau of Statistics (ABS) has just released the Average Weekly Earnings (AWE) data for the November quarter.A breakdown of the key changes is below: According to the ABS, on a seasonally adjusted basis, national total AWE increased by 0.8% in the November quarter, to be 3.7% higher year-on-year. Full-time total earnings increased by


China’s shadow debt problem

Below is a short video from the Wall Street Journal’s China Real Time Report discussing local government debt and explaining how much of this debt is in unlisted vehicles hidden away from the banking system. Because most of this debt is hidden, the interviewee, Tom Orlik, believe’s that China may never experience a banking crisis.


Wages growth beats expectations

By Leith van Onselen The Australian Bureau of Statistics (ABS) has just released the labour price index for the December quarter. According to the ABS, in trend terms total wages (excluding bonuses) increased by 0.9% over the quarter, with private sector wages rising by 0.9% and public sector wages increasing by 0.7%. Over the year,


Chanos, Chovanec on a slowing China

In separate appearances yesterday, Jim Chanos and Patrick Chovanec made some excellent points on the slowdown underway in China. Both are worth a look and listen… And for a great debate with Patrick Chovanec and others about whether the January statistical collapse is CNY or something less encouraging click.


Captain Glenn on bank funding costs

By Leith van Onselen Following on from yesterday’s post, The banks were right to lift rates, RBA Governor, Glenn Stevens, yesterday provided confirmation that Australian banks’ funding costs have increased in recent times in a Q&A session at ASIC. In the video, Stevens notes that funding costs did not fall in line with the 50


The banks were right to lift rates

By Leith van Onselen Yesterday, Fairfax published an article quoting Tokyo-based Societe Generale Asia Pacific head of interest rate strategy, Christian Carrillo, who claims that it is “almost mathematically impossible” that total funding costs for the banks were rising: “The claim that the recent increase in mortgage rates is due to higher funding costs is


The working man’s paradise

By Leith van Onselen On Friday, Houses and Holes wrote an interesting article on how the Australian economy appears to have informally adopted aspects of the German ‘kurzarbeit’ system of employment rather than the ‘slash-and-burn’ approach of US laissez faire capitalism: The basic difference is that Germany has a formal system of automatic stabilisers called


Two speed jobs (continued)

Following on from today’s earlier post on Australia’s Two speed jobs market, reader, Nick, alerted me to the ABS’ breakdown of aggregate hours worked by state, which supports the theme that Australia’s labour market is running at two speeds. Unlike my earlier post, which compared the growth in total employment, and showed Western Australia, Queensland


Two speed jobs

Following on from my latest posts (here and here) on the Australian Bureau of Statistics (ABS) employment figures, I now want to take readers through a quick analysis of the divergence of employment growth that has developed between Australia’s mainland states. The below charts split-out employment growth into states where positive growth was achieved in


The jury is still out on unemployment

Yesterday’s upbeat employment data left many readers questioning the veracity of the alternative Roy Morgan Research employment survey, which registered a very large jump in unemployment in January (see here and here). While it is true that the results for January were contradictory, I believe it is too early to discount the Roy Morgan numbers,


Under the employment hood

As Houses & Holes reported earlier, the Australian Bureau of Statistics (ABS) this morning released the labour force data for the month of January and it was very good. In seasonally adjusted terms, total employment increased 46,300 (0.4%) to 11,463,000. Full-time employment increased 12,300 persons to 8,063,100 and part-time employment increased 34,000 persons to 3,400,800.


Charting China’s housing bust

Gavin Putland at the Land Values Research Group (LVRG) on Tuesday posted some interesting analysis on the China housing market gleaned from a chapter of the Reserve Banks of Australia’s (RBA) most recent Statement of Monetary Policy (chapter extract below). According to Putland, China looks to be in the throes of a property crash, based


Welcome back Kohler

By Leith van Onselen Back in 2004, Alan Kohler penned a ripping article in the SMH on the pernicious impact that the Howard Government’s decision in 1999 to halve the rate of capital gains tax (CGT) had on Australian house prices: Five years ago Treasurer Peter Costello told Australians: “Work for a living and we’ll


Lending finance mixed

The Australian Bureau of Statistics (ABS) has just released the Lending Finance data for December and the results are mixed: The total value of owner occupied housing commitments excluding alterations and additions (but including refinancings) rose 2.0% in seasonally adjusted terms [see Monday’s housing finance data release for further information]: The seasonally adjusted series for


Two speed rents

Australian Property Monitors (APM) has released its Rental Market Report for the December quarter and it is a mixed bag. Canberra (+6.4%), Brisbane (+2.7%) and Perth (+2.6%) registered strong growth in house rents over the quarter, whereas Melbourne, Hobart and Darwin registered no growth: Over the year, Canberra (+6.4%), Perth (+5.3%) and Sydney (+4.2%) registered


NSW FHB blowoff drives housing finance bounce

By Leith van Onselen The Australian Bureau of Statistics (ABS) has released the December Housing Finance data this morning and unlike the Reserve Bank of Australia (RBA) credit aggregates, released earlier in the month, it points to increasing demand for mortgages. According to the ABS, in seasonally adjusted terms, the number of commitments for owner occupied


Real estate agents feel the housing chill

By Leith van Onselen Over the past year, I have written extensively on the economy-wide implications of Australia’s slowing housing market including, amongst other things, worsening government finances, slowing retail sales, and lower jobs growth. On Friday, RP Data posted an interesting blog about the pain being felt by the real estate industry from falling


Skyscraper index points to trouble for China

While cruising around the web this morning, I came across a great blog, Brazilian Bubble, which is a bit like a Brazilian version of MacroBusiness. Upon trawling their recent posts, I stumbled across the Barclay’s Capital Skyscraper Index, whose latest report was released last Month. According to Wikipedia, the Barclay’s Capital Skyscraper Index is explained


Bank funding costs continue to blow-out [Updated]

Following on from yesterday’s post on the stiff headwinds facing Australia’s banks, yesterday we received further confirmation that bank’ funding costs remain highly elevated, with National Australia Bank (NAB) paying a record price to issue unsecured debt in the local market: National Australia Bank opened the local unsecured bond market yesterday, paying a record price


Credit on the nose

Earlier this month, the Reserve Bank of Australia (RBA) released its credit aggregates data for the month of December, which revealed that overall private sector credit is growing at the slowest pace since the 1990-91 recession, with mortgage credit growing at the slowest rate in the dataset’s 34-year history: Yesterday, we received further confirmation of


The cautious consumer is an old friend

RP Data’s latest Property Pulse report contained an interesting article entitled Will consumers start spending in 2012?, which contains some fascinating charts and analysis on Australia’s changed spending habits. In May last year, I wrote an article, The Housing-Retail Link, which discussed the strong correlation between rising (falling) house prices and (increasing) decreasing retail spending, and argued


The banks’ earnings vice

Apart from showing that I have a head for radio and a voice for print, Tuesday night’s interview on the ABC’s The Business television program attempted to convey my belief that Australia’s banks are being squeezed by higher funding costs, which are adversely affecting their margins on new lending, and risks reducing the availability of


Bogan exodus drives tourism woes

The Australian Bureau of Statistics (ABS) has just released overseas short-term arrivals and departures figures for December, which caps off a record year for outbound international travel. In seasonally adjusted terms, short-term resident departures rose by 0.9% in December, whereas short-term visitor arrivals rose by only 0.1%. In the 12 months to December, depatures increased