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S&P downgrades the entire dumb bubble

Lordy: • In our opinion, economic imbalances in Australia have increased due to  strong growth in private sector debt and residential property prices in  the past four years, notwithstanding some signs of moderation in growth  in recent weeks. Consequently, we believe financial institutions  operating in Australia now face an increased risk of a sharp correction


Whose business is Amazon about to eat?

Credit Suisse: In our view, retail faces seismic change. We highlighted previously (link) the high cost structure of retail in Australia. With Amazon’s disruption potential, it is important for retailers and investors to think strategically about the retail value chain. ■ An alternative paradigm. An alternative way of thinking about the retail proposition is to


Future Fundie warns Aussie bubble as disastrous as Ireland, US

From JCP Investment Partners , one of three equity managers that invests for the Future Fund: In a proprietary study of the nation’s record high-and-growing household debt mountain, the Melbourne-based fund said Irish-style housing losses for the bigger-than-recognised pool of riskier borrowers could wipe out half of the banks’ equity capital. Interest-only loans, said JCP


Do-Brexit Malcolm is surely next

A few short months ago the Coalition was in league with the major banks as they built-out a perverse rent-seeking fake government to dodge a royal commission. In lock step, Do-nothing Malcolm was spawning phony banking inquiries faster than breeding rabbits. The alliance appeared unshakable even as it cost both government and banks. That is


Abbott deluded as ever on Budget repair

By Leith van Onselen Former Prime Minister, Tony Abbott, has labelled his Government’s 2014 Budget as the “gold standard” for Budget repair, and argued the latest Federal Budget, released last week, is “the budget you have to have” given the current Senate composition. From The Australian: “The 2014 budget was the gold standard in terms


UK Tories’ immigration reform a good model for Australia

By Leith van Onselen Over the past 20 years, net overseas migration into the UK has surged from below 100,000 to around 300,000 people annually: Much like in Australia, this surge in immigration has created all manner of problems for the incumbent UK population, including massively expensive housing (especially in London, where most migrants go),


As Aussies sacrifice, leaders rort

Kurzarbeit is a German term describing its particular labour market mechanism for dealing with periodic overcapacity: Short-time working or short time is a situation or system in which civilian employees agree to or are forced to accept a reduction in working time and pay. The term can refer to short-term, recession-related programs operating in several


Record low wages growth shatters Budget forecasts

By Leith van Onselen The Australian Bureau of Statistics (ABS) has just released its Wage Price Index for the March quarter of 2017, which revealed a continuation of weak wages growth across the economy, with annual wages growing at the lowest rate in the series’ 19 year history: According to the ABS, wages grew by


Ordinary workers to shoulder the tax load

By Leith van Onselen The Australian Treasury’s tax discussion paper, released in March 2015, forecast that Australia’s reliance on inefficient personal income taxes would rise inexorably over the next decade (to 56% of taxes by 2024-25), making reform an imperative as the population ages and the share of workers across the economy declines: Between 2014-15


RBA minutes takes aim at household debt

The Minutes from the RBA’s 2 May Monetary Policy have been released, which didn’t really say much outside warning on the risks associated with the build-up in Australian household debt. Note my highlights in bold below: Domestic Economic Conditions Members commenced their discussion of domestic economic conditions by noting that inflation outcomes for the March


Sydney would peak at 4.9 million with zero migration

Cross-posted from Crude Oil Peak: Immigrants to blame for high house prices, businessman Dick Smith claims Mr Smith said “jumbo loads” of immigrants arriving each week were the “main driver” behind the country’s housing affordability crisis 21/2/2017 http://www.smh.com.au/federal-politics/political-news/immigrants-to-blame-for-high-house-prices-businessman-dick-smith-claims-20170221-gui72k.html Fig 1: Dick Smith: “But the most fundamental right is to own a house with a backyard


19 days later, ANZ hikes specufestor mortgage rates again

Precisely 19 days after the last hike, via News: ONE of the nation’s largest lenders ANZ is clamping down further on interest-only loans and making it tougher for both owner occupiers and investors. In strict changes to be announced today, the lender has revealed it will crackdown on customers failing to chip into their principal


Australia’s declining household savings

By Philip Soos, cross-posted from LF Economics: In 2013, Credit Suisse presented some interesting research regarding the issue of household sector savings. While the commonly cited net saving ratio indicates the proportion of income the household sector collectively saves, Credit Suisse noted the measure of savings also includes superannuation payments. The issue is that compulsory


Housing finance strengthened in March

By Leith van Onselen Today’s housing finance data for March, released by the Australian Bureau of Statistics (ABS), posted increases in both investor finance and owner-occupied commitments. According to the ABS, the total number of owner-occupier finance commitments (excluding refinancings) rose by a seasonally adjusted 0.4% over the month to be up 3.8% over the


The great WA mining property bust

By Leith van Onselen The Guardian has published an interesting profile of the Western Australian mining property bust, where both prices and rents have collapsed: The calls to financial counsellors began about 18 months ago. Middle-aged, middle-class homeowners in Western Australia who had shifted their retirement nest egg from superannuation to property were suddenly unable


More retail carnage

Via Domainfax: Upmarket accessories retailer Oroton Group looks set to join the double-downgrade club following weaker than expected trading in April. OrotonGroup shares were placed in a trading halt this morning ahead of an expected profit downgrade, the second in five months. OrotonGroup said preliminary figures for April, an important trading month for the group,