Global bond backup

There’s a big move afoot. Very big. Nobody seems to have noticed yet but there is a backup in government bonds everywhere. And when this blog says everywhere, it means everywhere: United States: United Kingdom: Germany: China: Japan: South Africa: Australia: Brazil: Thailand:Ironically, the obvious trigger for this co-ordinated slump was QEII. Markets have been

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Links December 10: Bond rout

Internecine European leaders. German bonds out. EurointelligenceEU slithers toward fiscal union. FTECB buying the lot. Zero HedgeUS housing shrinking. More to come. Calculated Risk. Rates rising.US unemployment easing slowly. Calculated RiskRise of behavioural economics. Fund StrategyChina curbing inflation. Jim RogersChina’s great steal. FTChina fury at Defence White Paper. The AgeRecord job growth. Peter Martin, Michael


Now I Understand

One of my long-time readers, S.I.M., posted the above video on You Tube explaining why Australia is different and does not have a housing bubble, despite overwhelming evidence to the contrary. The video nicely captures the average Aussie’s view on the housing market. Check it out.


Looking for a clearer view of mortgage issuance

A few days ago we posted about AFG’s latest report on their mortgage brokerage. It seems these numbers stirred a few people up, and we received quite a few e-mails from readers asking how it could be so given the rising stock on the real estate market and other bearish news. Well firstly we have


Securitisation is innocent

This blogger recommends that you zip over to Delusional Economics and read Deep T. on securitisation. The piece is detailed and this blogger won’t go into the technicals of it. The point it wishes to make is not technical anyway, it’s philosophical. Deep T. begins: The 60’s were a time of great change in attitudes


Now it’s the banks turn.. BOQ warning

As our readers would be aware, Queensland is the head of the pack in the race to the bottom for the Australian States. The slow but on-going collapse of the residential property market, and more importantly the debt issuance machine that keeps it going, is slowly but surely leaking into the rest of the Queensland


Reporting anomaly

Yesterday, while rooting around in the ABS 5232 National Accounts: Financial Accounts (yes, I’m bored) this blogger turned up an extraordinary fact. Sometime in the June quarter of 2008, the national government appears suddenly to have deposited $12 billion into Australian ADIs. A quick look at the above chart showing the history of such deposits,


They’re still not listening Glenn

A day after the RBA left rates on hold the ABS and AFG reports that the lull in debt issuance may have been short lived, and Australians are back doing what they do best; indebting themselves on housing. Australia’s mortgage market proved surprisingly resilient in November, with mortgage sales figures increasing by 12.4% over October


Wikileaks in our trousers

The extraordinary material on display in the Fairfax papers today from Wikileaks rips a hole in the seam of what this blogger has consistently described as the “Great Straddle”: The national interest divergence that Australian leaders have allowed to develop between our strategic imperatives with the United States and our economic imperatives with China. This


Links December 8: Assange’s war

Julian Assange speaks. The Australian.And Wikileaks to the Herald devastate Rudd. SMHThen Beazley in The Age.Assange arrested. SMH Which looks like poor politics. Poll, PollChina fallout. John Garnaut Good news, bad news on US austerity. The EconomistUS rail volumes down. Money Game, Calculated RiskNo answers for Europe. Gideon RachmanIn: Ireland. Out: Spain, Portgual, Italy, Belgium,


Self fulfilling prophecy in a tightening credit market

After Gottliebsen’s waffle back in November where he admitted that easy credit led to high house prices when he said: With my wife I bought my first house in 1967 and I remember vividly what it was like in the 1970s. Getting a housing loan from the bank was extremely difficult and as a result


ABA revelations (updated)

What a morning! Your blogger spent it wading through the Australian Business Association’s submission to the Senate Inquiry into bank competition and the corresponding ABS data. The focus of this post is on the section of the ABA document dedicated to liabilities, which forms the key to the banks’ claim that their rising cost of


Links December 7: The new bubble

Europe’s ponzi mechanism. VOXEuropean wrap-up. EurointelligenceEuro to fall. BloombergOut: Ireland, Portugal, Spain, Italy, Belgium, GreeceUS bank failures. Calculated RiskChina’s listed commune.AsiaOneAustralia’s low inflation history. Henry ThorntonIndian iron ore exports still stuck. MineWebScramble for coal. The OzMore ore. SteelOrbisMajor metals 2011 forecasts. Australian Mining


China Bubble: More Bears Come out of the Wood Work

Following on from my earlier post, China: the Bear Case, a number of other commentators have come out publicly and warned that China is a bubble economy that risks imploding. Last Monday, The Telegraph ran an article on how Corriente Advisors, a Texas-based hedge fund manager that made millions predicting the crises in US sub-prime market and European debt, has


Rents to the Moon…. That other myth.

As we said in a previous post, we have read a number of recent reports that the sliding housing market will lead to higher rents. An example is a recent piece by Karen Maley from Business Spectator. This article selects a few hand picked suburbs provided by the REINSW in Sydney that have low rental


AFR redux

You might wonder why a blog dedicated to the analysis of risks to the Australian economy would bother to assess the decline of Australia’s leading business newspaper. But today there are two reasons to write about the Australian Financial Review (AFR), one short term, one long. The immediate concern is the resignation of Fairfax CEO


Readers’ Letter: It was different there too.

We received an interesting e-mail over the weekend from a reader Rebekah, she writes: I came across your blog for the first time and have found it extremely interesting. I thought that the following story on prices in Dublin’s most exclusive street may interest you and your readers. So often I read comments from people


Mind the gap

The great foreign policy analyst, Coral Bell, has often described in public how there is always a gap between a countries’ declared foreign policy and its actual policy. That is what one half of diplomacy is all about: Maintaining the gap. Hence the 17th century adage attributed to Sir Henry Wotton that ‘an ambassador is


Links December 6: The Great Straddle

Wikileaks on Rudd. John GarnautBank reform released Wednesday. Peter MartinSFW please. GittinsIrish default. IndependentHouseless, cold, lonely, persecuted. Financial AramggedonGlobal ubermencsh II. Baseline ScenarioWeek ahead for the DOW. Calculated Risk2011 China rate rises official. NYTISM not all good. PragCapVale’s plan. BusinessWeek


Another bad week

According to APM none of the capital cities could even crack 60% auction clearance this weekend; the two major capitals both recorded 56% which means approximately only half the houses up for sale aren’t selling. This wouldn’t be so bad if the number of properties entering the market, and already on the market, weren’t at


More bank reform leaks

From the SMH today: Treasurer Wayne Swan will this week unveil his long-awaited package of measures to rein in the banks and boost competition in the sector. A senior Labor source confirmed Mr Swan would present his reform package to cabinet when it meets tomorrow. He will then make final adjustments to the package, which


More reading…

How to leave the euro. The Economist2011 markets. FTChinese inflation. Doug Noland Return of the vigilantes. FTUS unemployment, the ugly graph. Calculated RiskETF madness drives JPM copper squeeze. Zero HedgeHugh Hendry on global macro. Zero Hedge


Unluck of the Irish

Earlier this week, Alan Kohler wrote an article in Business Spectator on the misery created by the Irish housing bubble/bust and its lessons for Australia: After 2002, when Ireland joined European Monetary Union and adopted the euro, the two things combined to create a massive property boom and, in essence, the government was able to


Weekend reading: US not

What happens to big houses after the crash? FOXNo FDR. Krugman, Palley (h/t nakedcapitalism)US’ very disappointing employment report. Calculated RiskThe job creation needed for recovery. Zero HedgeGold signals QEIII. KitcoBob Janjuah’s yeah right. Zero HedgeNew Glass-Steagall. Thomas HoenigRemember ForeclosureGate? EuromoneyGlobal übermenschBaseline ScenarioTrichet fights. Gavyn DaviesECB splinches vigilantes. Zero HedgeIreland, Portugal squeezed. Greece, Spain, Belgium in


David Murray Warns on Australia’s External Liabilities

In an interview published in Wednesday’s Australian Financial Review (AFR), David Murray, Chairman of the Future Fund and former CEO of the Commonwealth Bank, issued a stern warning on Australia’s high level of net foreign liabilities, which have reached nearly 60% of GDP (see below IMF chart).  Here’s some of the interview taken from


Premature loathing

Yes it is premature to cast dispersions on something that has not yet occurred, but we feel so strongly about this that we want to provide froth and spittle even before it may or may not occur. As noted by “houses and holes” today Momentum may be reaching a peak over the federal government’s activist


Will EQE weaken the euro?

The FT has an interesting take on whether or not EQE would weaken the euro, a key contention by this blogger in its assessment that the Aussie dollar is headed for weakness. Let’s take a look: Silver denarii were often debased by mixing in lesser metals when the Roman emperor needed more money to raise


Why did the RBA need a loan ?

As noted today by Kris Sayce of Morning money and also by the Age it seems that NAB and Westpac got themselves emergency loans from the US Fed at the height of the GFC. National Australia Bank and Westpac were among global banks to borrow billions of dollars in emergency funds from the US Federal