Why unregulated cryptocurrencies could trigger another GFC

Cross-posted from The Conversation: The price of bitcoin hit $17,000 late last year and – although the cryptocurrency has plunged since then – there are signs that an absence of regulation can hurt investors and trigger the next financial crisis. Despite the laudable blockchain technology and the great opportunities it offers in enabling quicker transactions,


What Treasury missed in its negative gearing modelling

Cross-posted from The Conversation: Labor MPs might be rubbing their hands together with glee at a Treasury memo that shows the federal opposition’s negative gearing policy will have a “small” impact on the property market. But insights from behavioural public policy, as highlighted by the 2017 Economics Nobel laureate – Richard Thaler and his colleague


Did the Turnbull Government mislead parliament on negative gearing?

Cross-posted from Independent Australia: The Turnbull Government deliberately misled Parliament on Labor’s negative gearing policy, but few in the Press Gallery asked the hard questions, writes Professor Jane Goodall. “MISLEADING THE HOUSE” is one of the most serious allegations a politician can face. But given that misleading statements are routine fare in Parliament, it’s not a charge


Household financial confidence continues to fall

By Martin North, cross-posted from the Digital Finance Analytics Blog: The latest edition of the Digital Finance Analytics Household Financial Security Confidence Index, to December 2017 shows another fall, down from 96.1 last month to 95.7 this time, and remains below the neutral measure of 100. The trend continues to drift south as flat incomes,


Household mortgage stress continues to build

By Martin North, cross-posted from the Digital Finance Analytics Blog: Digital Finance Analytics has released the December mortgage stress and default analysis update. Across Australia, more than 921,000 households are estimated to be now in mortgage stress (last month 913,000). This equates to 29.7% of households. In addition, more than 24,000 of these in severe


Australia’s wealth inequality data is badly lacking

Cross-posted from The Conversation: Australia is falling behind other nations and international bodies in measuring inequality, particularly the concentration of wealth. This also means we are in the dark about the trends affecting Australia’s middle class. The main source of local data is the Australian Bureau of Statistics (ABS), which publishes a Survey of Income


Trump tax plan to further crush America’s middle-class

Cross-posted from The Conversation: The U.S. middle class has always had a special mystique. It is the heart of the American dream. A decent income and home, doing better than one’s parents, and retiring in comfort are all hallmarks of a middle-class lifestyle. Contrary to what some may think, however, the U.S. has not always


Transurban’s West Gate tollway an undemocratic shift into uncharted territory

Cross-posted from The Conversation: Last week Victorians awoke to their very own Groundhog Day, with the Victorian government signing a contract to build the controversial A$6.7 billion West Gate Tunnel Project. Like the controversial East West Link, this project has no electoral mandate, and was rushed through the formal planning processes. It’s also part of


S&P: Home loan arrears fell in October

From Standard and Poors: MELBOURNE (S&P Global Ratings) Dec. 18, 2017 — Delinquent housing loans underlying Australian prime residential mortgage-backed securities (RMBS) fell to 1.04% in October from 1.08% in September, according to a recent report by S&P Global Ratings. We attribute part of the decline to a rise in outstanding loan balances during the


Household financial confidence continues swan dive

By Martin North, cross-posted from the Digital Finance Analytics Blog: Digital Finance Analytics has released the November 2017 results from our Household Financial Security Index. The index uses data from our household surveys to assess households level of financial comfort. The index fell to 96.1, which is below the 100 neutral metric, down from 96.9


How past governments dealt with low wages

Cross-posted from The Conversation: For the last four years or so average wages in Australia have barely kept pace with inflation, meaning no real pay rises. And all the while, the government has been betting on the market to improve things. Treasurer Scott Morrison stated: As the labour market tightens, that’s obviously going to lead


Did the iPhone kill global productivity?

Cross-posted from FTAlpahville: Dan Nixon from the BoE’s content and strategy division asks an important question this week regarding the connection between digital distraction and flailing productivity. As he points out on the Bank’s Bank Underground blog, there’s a chance digital systems, rather than adding efficiency in weird and mysterious algorithmic ways, could be causing something of


How road charges can alleviate traffic congestion

Cross-posted from The Conversation: Road congestion in large Australian cities is estimated to cost more than A$16 billion a year. Economists have long argued the best way to improve traffic flow is to charge drivers for their contribution to road congestion. We have now analysed data collected from 1,400 drivers across Melbourne to see whether


Aussie house price growth near top, but for how long?

By Martin North, cross-posted from the Digital Finance Analytics Blog: The latest BIS data series on home prices trends has been published to Q2 2017. Here is a selected range, which shows Australia is near the top in terms of trend growth, relative to other western countries, including UK, USA, Canada and New Zealand. Norway


Why an RBA rate hike looks a long way off

By Gareth Aird, Senior Economist at CBA: Key Points The outlook for inflation, wages, the consumer and the housing market suggests that monetary policy tightening looks a long way off. The market has ascribed a 50% chance of a rate rise by September 2018. We expect the cash rate to stay on hold until Q4


There’s still a lot wrong with TPP 2.0

Cross-posted from The Conversation: The latest incarnation of the Trans-Pacific Partnership (TPP) is said to have “fewer bad bits”. But as our experts point out below, there’s still a great deal wrong with, or missing from, the regional free trade agreement. The new TPP is informally known as the TPP11, after the United States pulled


ACCC too late the hero on NBN

Cross-posted from The Conversation: The Australian Competition and Consumer Commission (ACCC) has launched a public inquiry into the National Broadband Network (NBN). Already, Telstra and Optus have come forward, offering to compensate customers whose expectations of internet speed delivery were not met. But it’s four years too late. The ACCC dropped the ball when it


Costly medicine monopolies must be purged from TPP trade talks

Cross-posted from The Conversation: Negotiators from 11 countries have been racing to resurrect the near-dead Trans-Pacific Partnership Agreement before the Asia-Pacific Economic Cooperation (APEC) summit this weekend. The latest plan to get the controversial trade deal up and running again after the withdrawal of the United States involves freezing some of its controversial rules. These


Sydney mortgage holders are leveraged to the hilt

By Martin North, cross-posted from the Digital Finance Analytics Blog: One of the most powerful tools to assess risk in a mortgage portfolio is dynamic loan to income ratios (LTI). Whilst Loan to Value (LVR) has traditionally been seen as a simple lead indicator of risk, in a rising priced market, risks are hidden, while


Property investors drive fall in household financial confidence

By Martin North, cross-posted from the Digital Finance Analytics Blog: The latest edition of the Digital Finance Analytics Household Financial Security Confidence Index to end October shows households are feeling less secure about their finances than in September. The overall index fell from 97.5 to 96.9, and remains below the 100 neutral setting. We use


What the Paradise Papers tell us about global business and political elites

Cross-posted from The Conversation: The so-called Paradise Papers may sound familiar – leaked documents from a law firm that specialises in offshore services reveal how the global elite avoids paying taxes. Even the name has the same ring to it as last year’s Panama Papers expose. But the Paradise Papers are different, reflecting the complexity


How will the RBA’s inflation and growth forecasts change?

From Bill Evans, Chief Economist at Westpac: The Reserve Bank will release its revised forecasts for growth; inflation; and unemployment on November 10 in its Statement on Monetary Policy. Forecast ranges will be replaced with point estimates. Interpreting the mid points of the ranges as the implied point estimates from previous Statements we do not