Do variable mortgages prevent crashes?

Last month, the Federal Reserve Bank of Richmond published a report, Foreign Housing Finance, which highlights a number of problems with the US mortgage financing system and proposes a number of reforms based largely on the financing systems employed in other developed nations. While the entire report is interesting, the below chart, in particular, grabbed my

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Chart of the Day: Shipping signals

Today’s chart via Colin Twiggs is the Harper Petersen & Co index of container shipping rates: The index reflects international demand for container vessels and is a useful measure of international trade in light manufactured goods. Falling international trade would have the greatest impact on export-oriented Asian markets like China, Taiwan, Japan and South Korea.


Time to refinance?

The question has been legitimately raised, as fixed interest rates fall, is now the right time to re-finance? This week, housing finance results showed a bounce for refinancing, primarily driven by QLD: Interestingly, visual analysis of the nominal levels shows a stall in refinancing, whilst established dwelling lending (i.e buying houses off each other) has also reversed


The NSW budget’s carbon lie

In the wake of the NSW Budget, which justified increased royalties due to the supposed hit to its bottom line from the federal carbon tax, it is useful to examine the actual impact of carbon pricing on coal-fired generators. As a starting point, one needs to reflect that the methodology upon which compensation (in the


Hedonic price index limitations

In an ideal world, a selection of price indexes would be easily constructed and highly reflective of economic reality.  But we don’t live in that world, and we muddle our way through doing our best to measure price changes in the broadest sense. Despite many unresolved issues surrounding the methods and interpretation of hedonic price


September 8 links: Inflationista

Rocket: energy Up: Euro, Aussie Flat: ore, CCI Down:  grains, metals Smacked:  $US, Treasuries, gold Core relief, periphery pain: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year


GDP double takes

Here are some more analyses of today’s National Accounts. The pick in my view is the first by Bill Mitchell: As winter arrived (June 1), the March quarter Australian National Accounts came out and showed that the Australian economy contracted by a staggering 1.2 per cent. With the seasons passing into spring and the warm


Trading Day

The S&P/ASX 200 rebounded strongly today, up 107 points or 2.6% to 4183 points. In after hours trading, the market is holding on to these gains awaiting the Euro and US sessions, which are also likely to be bullish. Asian markets experienced slightly smaller gains, with the Nikkei 225 up 1.9% to 8756 points whilst


GDP rebounds

The ABS released their National Accounts aggregates today, with a broad surge in GDP growth since the dismal natural disaster-affected first quarter.  The key figures are below. Also important is the revision to the March quarter – up from -1.1% to -0.9%, leaving GDP up 1.38% over the year to June, and per capita GDP


A couple of points from the Guv

I really quite enjoyed this morning’s speech from Glenn Stevens. It was lively and candid and offered a couple of points worth noting for monetary policy debates. The first point I want to make is that Stevens has rather subtly ridden to the defense of the RBA board: By the time of the May Board meeting, there


Still interesting times

Here’s a copy of Glenn Stevens speech he is currently delivering in WA: Still Interesting Times Glenn Stevens Governor Address to the Chamber of Commerce and Industry (Western Australia) and the Chamber of Minerals and Energy (Western Australia) Corporate Breakfast Perth – 7 September 2011 It is very good to be with you this morning. In the


Europe’s optimism trap

To describe as sobering last night’s UBS report into the consequences of a European breakup hardly does it justice. It is about time someone began to assess the consequences of a breakup with a hard, cold eye and kudos to UBS for doing so. Hopefully it will help dispel some of the elementary drivel floating around


Chart of the Day: USD rally

The overnight action of the Swiss Central Bank (CNB) effectively pegging the runaway Swiss Franc (CHF) has to be looked at in context to the USD, which is experiencing a reversal of its own. First, let’s have a look at what the CNB is fighting against: the two year plus rally of the CHF vs


Unconscious RBA ready to cut

Howdy all. Back from holiday and into the storm! The RBA released its Statement yesterday after the Board meeting as is its custom. It is my custom, and many other pundits and commentators, to then go through the statement to try to distil from the change in emphasis and nuance what the RBA is thinking.


Hong Kong property stall

The Hong Kong government just sold three pieces of land.  The FT reports that the result is quite bearish. The results were actually fairly mixed. The first site being sold was Tseung Kwan O area 66A, which can provide 792,898 sq. ft. of residential space.  The pace of the auction was extremely slow, and the government threatened


Retail pain here to stay

Yesterday’s announcement by the Reserve Bank of Australia (RBA) that the official cash rate would remain on hold provoked a stinging response from the Australian Retailers Association (ARA): The Australian Retailers Association (ARA) says the Reserve Bank of Australia’s (RBA) decision to hold interest rates has left retailers struggling to hold on. The ARA had


A ray of sunshine for housing?

Well it looks like housing finally got some good news yesterday with a bit of a Queensland driven rise in housing finance. This was a predicted event. I had this to say back in July: I am actually expecting to see a bit of an uptick in median values in July as people bring forward their property transactions to


The optimistic NSW budget

I spent a bit of time looking through the NSW budget documents overnight. The major announcements are: $8 billion in savings over four years Privatisation of Port Botany to fund roads 5000 public servants to be offered redundancies Increase in coal mining royalties to offset carbon tax First-home buyer stamp duty exemption to be changed to


Stimulus for a recession that never was

Hands up who knew that Australia avoided a technical recession in the aftermath of the GFC? Kevin Rudd certainly got some miles out of it, noting in his farewell speech how proud he was of that fact and the role his government played.  But as usual all is not what it seems.  The Keynesians shouldn’t


Fat tax won’t slim a thing

Last week Hungary became the first country to introduce a comprehensive ‘fat tax’ on foods with high fat, sugar or salt content.  But it won’t make them slimmer or reduce health costs. Beginning Sept. 1, Hungarians will have to pay a 10 forint (€ 0.37) tax on foods with high fat, sugar and salt content, as well


September 7 links: Swissy flips the bird

Up: $US, Treasuries Flat: gold, energy, ore Smacked: CCI, grains,  Euro,  Aussie, metals Core relief, periphery pain: Greece 2 Year 5 Year 10 Year Portugal 2 Year 5 Year 10 Year Ireland 2 Year 5 Year 10 Year Spain 2 Year 5 Year 10 Year Italy 2 Year 5 Year 10 Year Belgium 2 Year 5 Year 10 Year France 2 Year 5 Year


Trading Day

The S&P/ASX 200 fell again today, down 66 points or 1.6% to 4075 points. In after hours trading, the market is up slightly to 4100 points waiting (dreading?) the European market open and a probably gap down when the US re-opens after the long weekend. Asian markets experienced similar losses, with the Nikkei 225 losing


RBA holds, ramps caution

Statement by Glenn Stevens, Governor: Monetary Policy Decision At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent. Conditions in global financial markets have been very unsettled over recent weeks, as participants have confronted uncertainty about both the resolution of sovereign debt problems and the prospects for economic growth


The risks swelling around gas

Australia’s energy sector, or at least LPG and CSG sectors, is not yet creating the impact of iron ore or coal, and in some ways represents more a play on the future than either of the aforementioned commodities. But there is also likely to be a growing polticisation with these industries, if only because of their


Qld drives housing finance bounce

So, we’re having a bit of a bounce in housing finance. Owner occupied was up 1.6% in July and investors 1.9%. Nothing too extravagant but certainly a rising from the floor. To the knees one might say: We’ve recovered much of the territory lost in the first half slump, though as you can see the


Decrease in CAD equals lower GDP

The Australian Bureau of Statistics (ABS) released current account figures for the June 2011 quarter (emphasis added) today: In seasonally adjusted, current price terms, the current account deficit fell $3,696m (33%) to $7,419m in the June quarter 2011. Exports of goods and services increased $5,837m (8%) and imports of goods and services increased $2,985m (4%).


More CEOs grab bonuses

In The Great Crash of 2008, Ross Garnaut and I identified four major causes of the GFC: housing bubbles, global imbalances, clever money and greed. Pretty much none of these causes has been seriously addressed. But today I’m going to focus on the last. Greed is a part of all bubbles of course, but in


Chart of the Day: Equity carnage

Given the events of last night (German DAX down 5.3%, UK FTSE down 3.5%, Italian MIB down 4.8%), today’s chart will be an overview of equity markets and their short term patterns. Let’s start in Europe: The Italian (remember, 7th largest economy in the world, sometimes forgotten) FTSE MIB Index is about to retrace the


Economic cogs in the mining PR machine

As Houses and Holes pointed out yesterday, the Minerals Council of Australia (MCA) public relations machine is hastily filling the mainstream media vessel with its store of positively framed economic analysis. The latest analysis from the stockpile is a study undertaken by Deloitte Access Economics (DAE) which surveys Australian mining companies about their tax obligations in order


The Merkel effect

The true personal price of the Eurozone disaster was read out to  Angela Merkel overnight as her and her party got wiped out in the election in her very own state: German Chancellor Angela Merkel’s party suffered its fifth election loss this year after she failed to sway voters in her home state with a campaign