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Victoria’s budget black hole will deepen

Last week, I showed how the Victorian Government is overly addicted to property taxes and discussed how next year’s State Budget is likely to get hit hard by falling stamp duty receipts, which are likely to send the budget into deficit. Included in this article was the below chart showing the Victorian Government’s heroic forecast

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29

Economics of piracy

Public debate over Internet piracy is riddled with contradictions and fingerprints of vested interests.  In the US, congress is considering the Stop Online Piracy Act (SOPA), while in Australia, an alliance of internet service providers had their proposal to crack down on piracy rejected by the Australian content Industry Group (group of music, software and

0

China loosens

People’s Bank of China just cut the reserve requirement ratio by 50 basis points, effectively from 5 December 2011.  The last time when the RRR was changed was 14 June, which was a hike of RRR by 50 basis points.  RRR for large banks are currently standing at 21.5%, so the 50 basis points cut would reduce

6

December 1 links: Central banks ride to the rescue

Down: Treasuries, $US Flat: ore Up: euro, Aussie, gold, metals, energy, CRB, grains Contagion: 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 10 Year Germany 2

25

Trading Day

The S&P/ASX 200 Index, after a volatile session, finished up 17 points today, its third positive day in a row, to 4119 points, arguably on the back of end of month window dressing as all the gains came in the last 20 mins of the day. The next target for the local bourse is resistance

15

Invisopower! gives way to blog power

One of the joys of the blog form is that it the work of a collective mind. Not a borg collective of automatons but a group of specialist individuals and readers that can contribute their various skills and insights to a much clearer understanding of what the hell is going on. This stands in stark

8

The full R.P. Data report

As H&H mentioned earlier today RP data release their latest home value index report (available below). RPData took a fairly bullish stance on the previous month’s data, but I did note at the time that I felt it was premature: RPData’s bullishness is premature given this is a single month’s data and we all know

7

More European financial chicanery

A couple of stories out of Europe that I didn’t catch in my morning post. The changes to the EFSF has been ratified by the European Finance ministers: Euro area Finance Ministers agreed on 29 November on the terms and conditions to extend EFSF’s capacity by introducing sovereign bond partial risk participation and a Co-Investment

34

Comparing house price declines

Back by popular demand, here is my chart on the respective rates of decline for Australian housing now versus the 2008 experience (which obviously reversed)  and the US experience in the GFC. Obviously this is a limited sample and is not intended to suggest that local housing is on the same path as the US.

6

China links

Courtesy of Sinocism: China’s online supermarkets, a great entry-platform for internationals – xinhua-China’s flagship literature magazine launches English version – Pathlight: New Chinese Writing – MW Reiterating Strong Sell on FMCN | Muddy Waters Research – Focus Media Responds Further to Muddy Waters Allegations — SHANGHAI, Nov. 29, 2011 /PRNewswire-Asia-FirstCall/ – – South Asia’s water: Unquenchable thirst | The Economist –

15

Invisopower! detected

Regular readers, especially those going back to my inglorious days at Business Spectator, will no doubt be celebrating with me that someone in the MSM has donned the invisibility detection glasses and seen the Predator-like shimmering fog surrounding the banks wholesale funding. Something that I dubbed Invisopower! late last year. Michael West is on the case:

47

Capex rocket takes off

Capex is out and is the one positive Australian story that just keeps on giving. First the September quarter actual spending estimates: The trend estimate for total new capital expenditure rose 8.2% in the September quarter 2011. By asset type, the trend estimate for buildings and structures rose 11.3% and equipment, plant and machinery rose

11

Credit growth weak during October

The Reserve Bank of Australia (RBA) released Financial Aggregates data for October today: Total credit provided to the private sector by financial intermediaries rose by 0.2 per cent over October 2011, after rising by 0.5 per cent over September. Over the year to October, total credit rose by 3.5 per cent. Housing credit increased by

28

Macquarie sees “white collar recession”

Macquarie is predicting a white collar recession in Australia, raising its forecast for unemployment to 6%: Our economics team recently moved its unemployment forecasts to 6% on the view that Australia will experience a “white collar” recession. The team sees upside risk to 7% in the event that retail, manufacturing and tourism sectors also decide

1

New home sales rise from the floor

New home sales have posted a modest 5.5% bounce in October. They are still languishing, however, as shown in the above chart. As Ross “pull no punches” Gittins would say, off to the Pilbara with you builders. Full release from the HIA below: 2011-10 NHSS National Media Release

29

House prices continue to melt in October

R.P.Data results for October are out and it’s an ongoing Spring thaw, 0.5% down for the month seasonally adjusted, with an adjusted figure for September doubling the fall to 0.4%. Here’s the chart: And raw: And the R.P. Data House Price Index over time: As well as, real house prices: And finally, state by state

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House prices to rocket on frog

You know the Melbourne housing market is in trouble when (h/t LBS): Developers say property prices in Melbourne’s urban growth corridors may skyrocket because of an endangered frog. A draft report released under new Federal environment laws has recommended some growth areas be off-limits to developers to protect the growling grass frog. Developers say the plan,

1

European trade contagion hitting China

A few weeks ago I posted on European trade links to the other major economies. In the post a produced the following chart on Chinese exports to the EU27: So, the EU is China’s largest export destination. Now, from Bloomberg today comes this: Slumping shipping costs show exports to Europe from China are “falling off a cliff”

6

Chart of the Day: US house prices vs rents

Today’s chart comes from Calculated Risk as the S&P/Case-Shiller Home Price Indices were updated for September 2011 overnight (direct source here). There are 3 charts derived from the Case-Shiller data, nominal and real house prices and the house prices to rent ratio. The latter is the most interesting, in my opinion, as housing costs (purchase

2

More European recession signals

Overnight the Italian bond auction went as expected: Italy was again forced to pay above the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts when it sold 7.5 billion euros ($10.1 billion) in bonds today, short of the maximum target for the auction. Italy sold 3.5 billion euros in three-year debt,

15

Can the US economy decouple?

Last night’s Wall St trade took heart from a big jump in the Conference Board consumer confidence figures. It is great that the US has weathered its QE2 withdrawal and deficit ceiling debacle, but we should bear in mind that the index only rose to July levels, which are still very suppressed: Despite this,  yesterday the

39

Recourse mortgages don’t prevent housing busts

Yesterday, Delusional Economics linked a video from Sunday Sunrise showing SQM Research’s Louis Christopher and Sunrises David Koch (‘Koshie’) discussing the Australian housing market. While much of what both commentators said was reasonable, I found one point made by Koshie misleading: From 4.40 of the video, Koshie notes that a major difference between Australia and the

15

Euro in a death struggle

We haven’t seen John Talyer for a few months or so, since he forecast Western recessions and a rocketing $US. Clearly I agree with those calls and they look more and more prescient now. Today he has some very interesting things to say about currencies:

5

The nips and tucks of MYEFO

As H&H mentioned yesterday the mid-year economic and fiscal outlook was released by the Treasury yesterday. We have already covered quite a bit of this so I will not go into too much detail. If you are having trouble sleeping or feel the need waste a good part of a day then the monster is

37

Keen questions economics of free trade

In his trademark way, Steve Keen recently upset the apple cart of the economic mainstream by questioning the assumptions economists make to explain the benefits of free trade between nations.  Free trade is yet another example of an economic principle that is sound at an individual level, but cannot be simply translated to a macro level. Keen

1

November 30 links: Undollar love

Down: Treasuries, $US, ore (1%) Up: euro, Aussie, gold, metals, energy, CRB, grains Contagion 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 10 Year Germany 2 Year

0

China links

Courtesy of Sinocism: xinhua-China “shocked” by NATO strikes, urges respect for Pakistan’s sovereignty – China, Myanmar to enhance military ties-Xinhua – 新浪股价开盘后大跌 误传为浑水攻击目标-搜狐IT – 做空机构“浑水”的下个目标会是谁?-华尔街日报 – The Story Behind Today’s Earlier Bogus Sina Rumor – Forbes – The Political Economy of the Chinese Coal Industry: Black Gold and Blood-Stained Coal (Hardback) – Routledge – 广电总局:每集电视剧不得以任何形式插播广告_新闻_腾讯网 – 缅甸的春天来临了?-张铁志-财新博客-新世纪的常识传播者-财新网 – 她是我们最爱的女人,她的坚毅,她的勇气,当然还有她的美丽。当去年十一月,翁山苏姬从二十年来断断续续的软禁中被释放出来时,没有人知道这只是又一次的暂时鬆绑,还是象徵一个重要的转变。 Quelle Surprise! Banks Lied

11

MYEFO OMG

So, the MYEFO delivers a $20 billion black hole that is filled by fiscal cuts over the next four years. I’m going to leave a detailed analysis of this beast to Delusional Economics tonight. Right now I’m just going to take a few moments to run through the assumptions behind the updated forecasts to give

40

Mining projects go ballistic

From NAB today comes this little note on a big subject, the developing pipeline of major mining projects: AUS: Resource project listing sky-rockets to $232bn from $173bn in April Prior to the release of the Government’s mid year review of the Budget this morning, an updated listing of major resource development projects has also been