Deutsche: Inequality getting worse

Via the FT, Deutsche has a big report out on inequality:   And they think its only getting worse. No surprises there. This is one of our megatrends (see our primer for more details) that we see at the root of the lack of demand and the increases in debt. My take is that we are


New Years Chartfest, 2 January 2018

All picked up from Twitter or reading within the last week… GLOBAL MARKETS & MACRO Total Assets of Major Global Central Banks 2017 Best & Worst commodities 2017 Best & Worst Currencies USD – GBP, EUR JPY 2017 Asset Returns Global Bonds and Central Bank balances Commodities v Equities Global Bonds Outstanding   UST Yields


Negative interest rates spiral to ever lower depths

by Chris Becker An interesting chart from 720Global: Federal Reserve (Fed) stimulus comes in two forms as shown above. First in the form of targeting the Fed Funds interest rate at a rate below the nominal rate of economic growth (blue). Second, it stems from the large scale asset purchases (Quantitative Easing -QE) by the


Abenomics still not working or is it?

by Chris Becker Time to kick the can again on endless QE. Japan’s July CPI figure came in at a stonking 0.4% annualised…Take away energy prices and its only 0.1% per annum. Not a bad situation to be in actually and while stuck at this level for four months in a row, its “better” than


Draghi drags QE into normalcy

by Chris Becker The central banker elite meet in Jackson Hole, Wyoming for their annual symposium later this week, but ECB President Mario Draghi made traders sit up and notice a day or two early last night with a speech in Germany. What was surprising, particularly in the midst of the anti-QE brigade, was his


Norway’s SWF does its job

by Chris Becker First world problems in a nutshell. You have to drawdown some of your savings for the very first time – a meager $11USD billion or so from your near $1 trillion sovereign wealth fund (SWF)  – because lower commodity prices are taking big slugs out of your budget. And then, and then


Eclipsing petty microeconomics

by Chris Becker There’s going to be a total solar eclipse across most of the continental United States today (well, their today, we’ll all be asleep) and given the uniqueness of the event, there’s been some hyperbowl and superbowl like reporting on it. This one takes the cake though. A consultancy firm reckons the eclipse


Tim Toohey jumps to hedge fund

From the AFR: High profile Goldman Sachs economist Tim Toohey has joined Ellerston Capital as trader Brett Gillespie builds his team at the newly created macro hedge fund unit within the $4 billion asset manager. …Mr Gillespie, who worked as a trader at well known macro hedge fund Tudor Investments returned to Sydney from London, and has since


The beautiful deleveraging goes ugly

From John Tepper comes this sobering chart of debt in the US post-GFC, just as it hits new highs in the stock market and elects an Administration and Congress hell bent on soaring government debt even higher: Not quite the beautiful deleveraging that Ray Dalio at Bridgewater talked about several years ago as the lessons


A new virus in economics

From Elgaronline via Steve Keen: A new virus, known as ‘Reality’, has started to afflict Mainstream Economists, causing them to reject the ‘as if’ arguments they used to use to justify their models. There is no known cure for the virus, and complete avoidance of ‘Reality’ is the only effective strategy to prevent infection. The WHO


More debt for less work

From JP this week: Similar to one of our long-term investment trends – although the use of retired workers only (ignoring kids which were a much larger proportion in the 1960s) does make the graph look more dramatic than it might otherwise be.


Blinkered consultant offers serfdom as super-pension reform

The scourge of the neo liberal age is the management consultant type which never actually delivers much of an outcome for anyone, but regularly appears in private sector and public sector workplaces, usually under the guise of doing something ‘strategic’ which involves talking to lots of ‘stakeholders’ but sometimes looking at ‘processes’ and how ‘efficiencies’


Let’s measure human progress instead of GDP growth

Cross posted from The Conversation by Tani Shaw PhD Scholar, Institute for Sustainable Futures, University of Technology Sydney Ever since 1944, Gross Domestic Product (GDP) has been a primary measure of economic growth. It’s in the news regularly and, even though few can define what it means, there is general acceptance that when GDP is growing,


Finns trial a new safety net

Finland is trialing a Basic Income project that has the potential to create a more robust safety net for the multitude of Western middle and lower class employees that are being disrupted on almost every front – economic, political, technological and ideologically. Just as the swamp is about to be backfilled in Washington instead of draining


Central banks pushing on strings again

by Chris Becker This month has seen the antipodean central banks both cut rates, with almost no flow through to mortgages to relieve consumer debt and an appreciation in their respective currencies, in perfect opposition to their stated goals. This is not a new trend – far from it. What’s supposed to happen when the


Wealth effect is but a dream

Barry Ritholz has penned a piece at Bloomberg shaming the Federal Reserve – and the economic establishment – about their slavish devotion to the so-called “wealth effect”. This is something that is bandied about as the reason why high house prices are always “good”, as mortgage holders feel good about the ephemeral equity, boosting consumer


Easter links March 25-28, 2016

Sydney Heads, 1865, Eugene von Guérard, Art Gallery of NSW …more to come…   China Chinese premier vows to stabilise the property market – SCMP ‘Skyrocketing’ debt at state firms among biggest challenges facing China’s economy – SCMP Shanghai Said to Be Nearing Purchase Curbs for Warming Property Market – Caixin China’s rust-belt city Shenyang may


Capitalism needs saving from itself

The WSJ has a great book advertisement/review, disguised as an op-ed with Robert Reich, former secretary of labor under President Bill Clinton, but interestingly enough it strikes to the core of the problem with today’s capitalism. It is plain that while developing economies have made huge progress in terms of prosperity, rising living standards including


When the rich get richer they pay less tax

Cross posted from The Conversation: David Ingles Senior Research Fellow, Tax and Transfer Policy Institute, Crawford School of Public Policy, Australian National University Should we tax the capital income people receive from their investments or property? This may seem a strange question – don’t we already? But the answer is that due to exemptions, we


Missing: Morality and flexibility in economics

I spoke last week at the EDO LawJam about missing elements in the economic analysis of major projects in Queensland, and across Australia. Assessments of the merits of such projects typically require some kind of cost-benefit analysis. This analysis is intended to take into consideration the vast array of externalities and second round effects of major mines,


Why trickle down economics doesn’t work

by Chris Becker From the chaps at The Renegade Economist, an interesting preview into why trickle down economics – Reagonomics or supply side or more plainly, bullshit economics – doesn’t work and why it has captured the political process. The IMF recently disproved the theory but like a lot of the stink arising from modern


Division of labour is the outcome, not cause

I’ve written twice now on the spurious ideas in the division of labour story as an underlying cause of productivity growth in economics. First I questioned whether Adam Smith’s observation of a division of labour in 18th century pin factories made much sense, given that the 18 tasks required to make a pin were undertaken by