Crisis of the West

In one very important sense, the Standard & Poors downgrade of the United States credit rating is spot on. The debt ceiling debacle that preceded the ratings action showed an extraordinarily destructive political culture at work in Washington. To take the Federal Government within inches of default for no apparent reason was beyond infantile and

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Europe’s end game

Last week there was a hint that the Europeans may have been finally grasping at a real resolution to their long running economic crisis. The speed at which the EFSF guarantee of the smaller periphery nations had led to contagion in Italy and Spain came as a surprise to the Euro-elite and under pressure from the


China’s morbid dependency

In the lead up to Standard and Poors’ (S&P) downgrade of US Government debt, the largest holder of US Treasuries – China – had stepped-up its warnings and condemnation of the US Government’s fiscal mis-management and its deteriorating debt repayment capability. In November 2010, China’s Dagong Global Credit Rating Co. reduced its credit rating for


The Great Volatility

The S&P/ASX200 has slid 12% in four weeks with similar falls across major developed markets as the Western crisis has gathered pace in the past month. Apart from the usual and vapid insistence to buy any and all stocks now because they are “cheap”, some commentators have said that ”buy and hold” is dead and


Currency reservations

In February 2009 after I came back from holidays in Yamba I sat down with a mentor and mapped out how we thought the crisis would manifest over the coming years. I had a massive advantage over many investors and traders in that in my research I had stumbled upon a book written in 1996 by


Fog of the aged

Have you ever wondered why MacroBusiness exists? Why it is necessary for a dozen thirty and (just) forty-somethings to get together and write their buns off about the Australian economy? The first and most vital clue in answering the question is the ages of the MB team. At MB we are seasoned enough to have


August 8: At the precipice

Israel crashes. Bloomberg ECB mulls massive bond purchases. WSJ French-German statement. ZeroHedge Europe’s Lehman moment. BBC S&P wrong, no recession. Buffet Recession is upon us. Gavyn Davies, Nouriel Roubini Week ahead for the Dow. Calculated Risk  Three things the Fed can do. WSJ Nothing in the Australian press of value.


D’oh, S&P (updated)

Oh my, from the WSJ (h/t Precious Bodily Fluids): A mathematical error discovered late Friday by Treasury Department officials has thrown into limbo — at least temporarily — plans by ratings firm Standard & Poor’s to downgrade the top-notch AAA credit rating the U.S. has held for 70 years, people familiar with the matter said. The


The governance of money

The idiotic ideological battle in Washington over the debt ceiling was yet more evidence of the failure of governance in Western economies, which is the real crisis. Then, after the stock market carnage of last week, the attention was focussed, reasonably enough, on government’s MANAGEMENT skills — how good they are at being efficient bureaucrats


S&P downgrades the US

From the newswires: S&P downgrades US debt to AA+ The US had its AAA credit rating downgraded for the first time by Standard & Poor’s to AA+ based on its judgment that the debt ceiling deal agreed by lawmakers would not be enough to curtail record deficits. “The downgrade reflects our opinion that the fiscal


Australian Dollar Weekly Wrap

A big week for the AUD as risk finally went off and the AUD tumbled 600 points from the high of the week to finish at 1.0442 in New York this morning. Anyone who talks of safe haven buying now should have to pay these 600 points to charity. On a million dollar AUD position


Data Vault

Australian Data At was another big week in Australia with the a number of the key monthly releases showing further deterioration in the non-mining sectors of the economy while the trade balance was a shinning light with another strong performance. The RBA also updated their medium term forecasts which are looking increasingly optimistic relative to reality.


Weekend Links: Europe all in?

Rocket: Euro Up: ore, gold, $US, energy Flat: Aussie Mixed: CRB, grains Down: metals  Europe does the big ease: 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


Anatomy of a Crash

The mainstream media (MSM) have repeated verbatim their headlines of drastic downturns in stockmarkets, but what’s really going on around the world? In this post I want to illustrate the anatomy behind worldwide market ructions, placing them in context to the 2007/08 crash using some macro charts, and how its not just stock markets “suffering”.


Another Crisis – Live

It looks as if European crises have now become a bi-monthly event with the previous one just 2 weeks ago. Once again the Daily Telegraph UK has supplied insomniac Schadenfreudalists with some riveting entertainment with another semi-live blog of the unfolding drama. Latest update 10.00 Italy‘s GDP figures are out, and they’ve come in as expected. Official


Australian dollar downside targets

The AUD traded a 1.0390 to 1.0790 range for a couple of months before breaking out recently and trading all the way up to 1.1080. The ructions in markets have it threatening the bottom of this range as I write, with the AUD at 1.0442 as Europe has walked in and started selling in earnest


Earnings Update: Resmed

Only one company reported earnings today on the ASX: Resmed (RMD). Macrobusiness will be reporting on earnings and valuing the key companies throughout the earnings season. Remember to bookmark the overall update here. Resmed(RMD) Resmed, a manufacturer and marketer of respiratory disorder products, announced year end revenue of US$1.2 billion, a 14% increase, resulting in


Next Week: earnings continue

Amongst the market meltdowns, the data prints and earnings reports roll on – what’s coming up next week? Locally, housing and finance lending data will be closely scrutinized. The share market continues with full year earnings results – click here for my continually updated post on earnings, including links to news and valuations. Internationally, its


RBA forecasts

Below find a series of charts illustrating the changes to the RBA’s forecast arising from today’s Statement on Monetary Policy. Somehow, I think the alterations we’ll see in the next SoMP may be somewhat greater…  


Trading Day

The S&P/ASX 200 slumped on the open, down over 160 points or nearly 4% and is now at 4115 points. Other Asian markets are experiencing similar sharp losses, with the Nikkei 225 down 3.5% at 9319 points, and the Hang Seng falling further, down 4.5% at 20895 points. Other risk assets are getting walloped, with


SoMP hedges its bets

Today’s quarterly Statement on Monetary Policy is, like the economy, a balancing act. The RBA’s confirmed its central medium term bias to raise interest rates by confirming its expects above average rates of growth ahead: In the short term, the GDP outcomes for the next few quarters are expected to be boosted by arecovery in


Bank CDS holding up (down)

We noted recently that there had been a worrying blow-out in Australian bank CDS prices. Taking a look today, amidst the advancing global turmoil, we can see that things have not so far deteriorated: Over the longer term, however, prices remain quite elevated:


Chart of the Day: bear is back

Today’s charts come from Avid Chartist, who has summarised last night (and in fact the whole week) bear action on his blog. This is a bear market – where rallies (on expectation of milky wilkies – QE, stimulus, rate cuts etc) will be sold short by traders. The most closely watched equity market – the


Australian dollar is no safe haven

The AUD has been smashed in the past 36 hours as markets have gone off and fear and uncertainty has risen. From trading 1.1068 earlier in the week it sits at 1.0468 as I write. In many ways it is a resumption of usual transmission for the currency that I believe is the world’s favourite punt. This


The centre cannot hold

It’s quaint you know. Analysts faith in the system, I mean. There are a couple of really smart articles out this morning from really smart people about really smart things. And they’re making reassuring noises that there is no recession coming and that you should stay in your trades, that yesterday’s money making strategy is


AFG’s July data

Just so we are clear about this, I am no longer sure if I trust the AFG data after the data revisions I reported on in early July. But in crazy times such as these it is important that everyone gets all the data and makes the decisions for themselves. So for the sake of


Will aged care exacerbate the baby boomer bust?

Yesterday, Fairfax published an interesting article, Sell the family home: PM’s aged care shake-up, which highlights one of the key longer-term challenges facing the Australian housing market: the impending retirement of the baby boomers. JULIA GILLARD will prepare the ground today for the biggest shake-up of aged care in decades with a speech calling for


CBA’s returning storm

As a resident of Townsville in North Queensland during the pre-GFC stock market frenzy I witnessed first hand the madness that was Storm Financial. Many of my colleagues would strut around the office spruiking about their wealth and their up-and-coming all expenses paid holiday to Europe where Tina Arena would be doing a personal concert