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Weekend reading

Contagion slowing. Ireland, Spain, Portugal, Greece.European polity turning nasty. BloombergAnd the global systemic risks of Ireland. Naked Capitalism, Alphaville, Zero Hedge, Baseline ScenarioIceland vs Ireland. Paul KrugmanWhy equities are falling. BloombergSomeone else is breathing. DataDiaryNo oversupply coming here. FTNo housing bubble, banks strong, no issues with deficits. Gittins is asleep.The soft landing for housing. Michael

Latest posts

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Weekend Mailbag

Lots of mail this week. Thanks to everyone who is sending us e-mails just to let us know they are reading along and enjoying the content. As a follow up to Auction Unspectacular! Jase send us the following: I read your blog everyday and its absolutely fantastic stuff – I love it!Check out last week’s

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Glenn Stevens condemns bubble, banks, self

From the Glenn Stevens Senate testimony today, the SMH reports the following: The boss of the Reserve Bank has stood by the actions of the major banks during this month’s latest round of mortgage rate hikes, saying banking is not like a normal business. RBA governor Glenn Stevens was peppered with questions on the banks

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Masterful spray on the Europe disaster.

Anyone who has been a reader our blog for any length of time would be well aware that we think the European economic union is a political experiment that has been an economic disaster. It needs to be dismantled before political stupidity bankrupts nations and indebts hundreds of millions of people. Today we noted this

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Even more oversupply

As we have been saying since we started this blog, like in every other housing bubble, housing undersupply is a myth created by vested interests to try and excuse away the fact that house prices are ridiculously high. And… At end of every bubble there comes an admission that the “undersupply” of housing was in

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The gold bubble meme

Leon Gettler has a simple and neat summation of global macro today: The global financial crisis has created two worlds. First there is the real world of increased job insecurity, growing numbers of long-term unemployed, muted consumer demand and drip-fed credit And then there is the magical world of bubbles. They seem to be everywhere,

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Links November 26: Gold bubble?

This does not look good. Ireland, Portugal, Greece, SpainIrish nationalisation. AlphavilleChina bearishness. M. Pettis, Un. Economist, Bear FellerAustralia’s agricultural protectionism. Calyton Utz (h/t nakedcapitalism)Recession quarter. Peter MartinCameron Clyne wants banks to listen. SMHShould the RBA regulate the banks? Glenda KorporaalBubbles everywhere. Leon Gettler. Gold sentiment. Mark HulbertWA property bust. Delusional EconomicsNBN pricing under fire. SMH

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China: The Bear Case

Today I read a brilliant interview with Vitaliy Katsenelson – author, teacher and Director of Research / Portfolio Manager at Investment Management Associates Inc, a money management firm based in Denver, Colorado. Vitaliy provides possibly the best discussion of the Chinese economy that I have read, as well as some discussion on Japan. Like Jim

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Investor Trap

A few days ago a reader “Wayne” informed us that Western Australian real estate agents are giving some interesting advice to the market. The Real Estate Institute of WA is warning property sellers to take their investments off the market or risk selling below their asking price. REIWA figures show property sales in Western Australia

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Sickening delusional madness in Ireland

Bloomberg reports today that the Irish government just can’t get enough Austerity. Ireland’s government said it will cut spending by about 20 percent and raise taxes over the next four years as talks on a bailout of the country near conclusion. Welfare cuts of 2.8 billion euros ($3.8 billion) and income tax increases of 1.9

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RBNZ calls a spade a ponzi

One of the advantages of having a small neighbour that shares the same banking system is that we can glance over and see what kind of shadow we cast. And it is daaaark indeed. From Banking Day today: New Zealand is in a highly vulnerable macroeconomic position and may require a difficult transition, the Reserve

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Pricing the miracle commodity

This blogger has attempted to reverse-engineer the major miners’ quarterly ore pricing formula before. It is not an exact science, but it has concluded that prices tend to rise in line with the average spot price of the trailing quarter, whereas when the price falls, they seem to lag the average. In the same post,

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Links November 25: Rally my butt

Extend and pretend in Irish mortgages. AlphavilleMore contagion. Spain, Portugal, Greece, IrelandPortugal and Spain. EurointelligenceSpain. WSJWhy austerity is wrong. Martin WolfSigns of life for US employment. Calculated RiskNow its peak coal. Bloomberg Offshore refinancing costs to worsen in 2012. SMHOre still ripping. BloombergWeather the cause?!? Metal Miner

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Son of Wallis Challenge

Regular readers of this blog would be aware of my deep concerns about the stability and sustainability of Australia’s financial system, and calls for a ‘warts-and-all’ inquiry to identify the key risks and to provide the foundation for developing a safer and more efficient financial system going forward. These concerns are shared by others in the blogosphere including, but not limited to, Houses

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Right idea, wrong people

For some time now we have been talking about the need for an oversight committee, free from political interference, who have a mandate to develop and recommend policy that delivers sustainable economic outcomes. This would include a mixture of fiscal, monetary and social policy with the aim to deliver sustainability, improved productivity, full employment and

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Who’s to blame for bank populism?

Stephen Bartholomeusz writes: The anti-bank sentiment unleashed by Joe Hockey and the weak response to it by Wayne Swan has now resulted in a coalition of re-regulationists, with the six cross-benchers pledging their support for the Greens’ dangerous proposals for “reform”. Now is the time for Swan and Hockey to renounce populism and make the

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Son of Wallis Challenge

Yesterday we finished our post with. Australian needs strong long term policy frameworks and that can only come from an understanding of what could be achieved with better policy. Tomorrow we will endeavour to help start just that. Today we hope we are part of something that will…. The bank debate is not going well.

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Son of Wallis Challenge

The bank debate is not going well. Following the lead of our populist political class, the discussion has bogged down in the relative irrelevance of interest rate rises and whether or not banks should be allowed to move their mortgage rates more or less than the Reserve Bank. The obsession with lowest-common denominator politics means

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Tap of the mernin’ to ye

This blogger has a couple of thoughts on the Irish crisis. Fact is, as hinted at recently, prima facie, it’s much more attractive for Ireland to default. It’s write-down now or zombify yourself through more debt and internal deflation. This is pretty obvious and the Irish people may therefore be in a position to force

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Links November 24: Contagion!

Yields up in Spain, Portugal, Greece, Ireland Euro and risk currencies smashed. $US up. BarchartMetals trimmed. BarchartThe Irish rebellion. FTIreland’s TARP. Money GameIreland’s mistakes. FTIMF: Ireland must deflate internally. ITWhat Ireland should do instead: default. Guardian, Bloomberg, NYT, WSJyuan trades against ruble. China DailyUS housing still stuffed. Calculated RiskBlock busted. SMHMiracle commodity up again. BloombergIndian

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Bubble Bubble on the Wall, Who’s the Biggest of them All?

Regular followers would remember the below chart from my Battle of the Bubbles article, measuring potential overvaluation of the housing market by reference to total residential housing value to GDP. Well now AusHousingCrash has provided an even better chart comparing the aggregate land values (residential + commercial + rural) to GDP/GSP from the Australian Bureau of Statistics State

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Economic knowledge and democracy

Once again Joe Hockey has stirred the economic establishment, and as usual it is enjoyable to watch all the vested interests squirm against and spin his statements to their advantage. He has released his terms of reference of a new enquiry he would like to see established. 1. An analysis of the developments since the

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We are so different again.

Once again it is different here. That is correct. In the USofA they are called ‘Liar’ Loans we call them ‘low-doc’. However the outcome is much the same when the smelly stuff starts hitting the fan. Fitch says self-employed borrowers have been hit hard, which has pushed arrears among prime low documentation loans to a

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Suncorp "securing up"

We had heard recently on the rumour mill that Suncorp was “preparing something” to get them through the coming bad times in Queensland. Today we noted what it is. Australian regional lender Suncorp Metway (SUN.AX) has priced A$900 million ($890 million) of 2.5-year notes at 110 basis points over swap and BBSW, according to terms

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Future shock

Bloomberg reported yesterday that: New Zealand’s credit-rating outlook was lowered to negative by Standard & Poor’s, spurring traders to buy protection on the nation’s debt and snapping a three-day rally in its currency. “The main risk to the ratings would be a significant weakening in the credit quality of New Zealand’s banking sector,” S&P said

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The death of Invisopower!

In today’s AFR, Joe Hockey makes a simple and elegant argument for Wallis: The Wallis Inquiry formally rejected government guarantees of private companies (including deposit guarantees) for fear of inducing irreversible “moral hazards”. These risks found in all insurance markets where the availability of such protection has the perverse effect of encouraging beneficiaries to assume

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RSPT anyone?

Via Peter Martin, here’s an outline of Joe Hockey’ terms of reference for a real Wallis Inquiry. They’re a bit tilted towards how do we keep the ‘whole ponzi going’ and the greatest omission is any mention of mortgages but actually they are pretty good. And wide enough that anything missed will get in anyway.

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Links November 23: I said, SHUT IT DOWN!

Joe’s terms for Wallis. Peter MartinFear and loathing of Joe. The AustralianJoe the idiot. Hewitt, BartholomeuszKen Henry embraces Dutch Disease. Peter MartinUS austerity drive. Bloomberg, KrugmanUS bank face $100 billion BaselIII shortfall. FTUS housing shadow inventory. Calculated RiskHow Ireland’s bailout works. ReutersEurope in real trouble now. BloombergThe greatest central banker of our time. RCMThe coming

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New Zealand Provides Taste of Things to Come

In a surprise move today, Standard & Poor’s (S&P) – the worlds leading credit rating agency – downgraded its outlook on New Zealand from AA+ stable to AA+ negative. In what should be a big warning call for Australia, here are some of the things that S&P had to say [note: most quotes come from an S&P

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The Claytons Inquiry

It’s the Wallis Inquiry you’re having when you’re not having a Wallis Inquiry. And Stephen Bartholomeusz outlines it today: Earlier today Suncorp’s chief executive, Patrick Snowball, made a considered contribution to the debate, noting that since the crisis all the banks had diversified their funding and reduced their dependence on offshore wholesale funding markets. “This