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Sunday, 16 September

22:55

It's showtime Pete Wargent Daily Blog

Queens's Wharf is a whole new look for the city of Brisbane.

The original architectural showreel, courtesy of Star Group...



And now it's getting underway...



Exciting times for Brissie, and not a winking Kangaroo in sight.

19:25

Exchanges Round-Up: Aus Regulators Doubt Coinjar Volume, Paysend Partners With Bitstamp "IndyWatch Feed Crypto"

Exchanges Round-Up: Aus Regulators Doubt Coinjar Volume, Paysend Partners With Bitstamp

In recent news pertaining to cryptocurrency exchanges, Australias financial regulators have expressed skepticism regarding Coinjars purported trade volume, Paysend has partnered with Bitstamp to facilitate cryptocurrency purchases through its Global Account, and Seed Cx has announced a $15 million USD Series B funding round.

Also Read: A Decade After Lehman Brothers Died: Mises, Satoshi, Bitcoin, and Wall Street Worship 

Australian Regulators Skeptical of Purported Coinjar Volume

Exchanges Round-Up: Aus Regulators Doubt Coinjar Volume, Paysend Partners With BitstampIn a recent interview with Business Insider, Jordan Michaelides, Coinjar...

15:29

Failing upwards John Quiggin

Ive been busy finishing the manuscript of my book, and dealing with policy issues as they came up, so I havent paid a lot of attention to the Liberal leadership saga. One thing that strikes me is that Josh Frydenberg has had exceptionally favorable coverage, apparently on the basis that hes likable and popular. Thats fine, but if youre going to appoint someone as Treasurer, shouldnt a successful track record be a necessary (though not sufficient) condition? Morrison, for example, had a political success in stopping the boats (whatever the morality of the policy) and was generally seen as a successful Social Services minister (unlike his successor, who messed up the robodebt program). He didnt impress as Treasurer, but at least his previous career justified giving him a go. And while he looks underqualified as PM, the alternatives were even worse[1].

Frydenberg has essentially had one ministerial job, covering environment and energy (though with various titles and temporary add-ons like Northern Australia). In this capacity, his big contribution was the National Energy Guarantee. It was a terrible policy, made necessary by the failure of Turnbull and Frydenberg to face down the denialists in the government. Designed to be all things to all people, it ended up being nothing to nobody. Frydenbergs failure to secure agreement on the NEG was the proximate cause of Turnbulls downfall as PM, and the policy was promptly abandoned the moment Morrison took over. In what possible world is this a basis for promotion?

 

fn1. Bishop was ruled out on tribal grounds. Her weakness as Treasury spokesman years ago was also held against her, even though she wasnt obviously worse (in retrospect) than Morrison, and much better than Hockey. About Dutton, the less said the better. After that, its daylight.

08:41

Wages growth is coming (to VIC & NSW) Pete Wargent Daily Blog

Left slack-jawed

There's an old tradition when it comes to job numbers that goes something like this: if the numbers are crap we're doomed; and if the numbers are good then they must be wrong.

The technical term for this is confirmation bias.

As ever this month's booming jobs numbers were treated with anything from scepticism to outright derision.

And yet the solid results have kept on coming, especially in the two most populous states. 

There's another bias that tends to impact people: when things have been bad, they expect bad things to continue.

And quite understandably we're seeing a lot of this in relation to weak private sector wages growth.

After all, soft nominal wage price growth has been around since 2015, so it's becoming quite hard to imagine that pay packets could soon begin to swell again. 

But take note, because in some states this may be about to change...

Private sector wages to lift

Although it never seems to get reported anywhere, I've shown several times before that while the underutilisation rate is high, in volume measures terms things have been very steadily improving for the past few years. 

That is to say, lots of people still want more hours of work, but the numbers of extra hours wanted has been declining over the past four years.

03:55

Here comes Queen's Wharf Pete Wargent Daily Blog

$3bn Queen's Wharf

Big news for Brisbane's economy as the long-awaited $3 billion Queen's Wharf project gets underway.

And big news too for the future of Brisbane as a capital city and major player.

Significant housing market implications in addition, of course, as the inner city suburbs fill up.

Read the attached report from News (click link or image to read).


The mixed-use Howard Smith Wharves project is already well into its construction phase.

And it too will also be a terrific boost for adjacent suburbs including New Farm, Teneriffe, and Fortitude Valley.


Brisbane, truly, the jewel of Australia!

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Saturday, 15 September

16:00

The Weekend Quiz September 15-16, 2018 answers and discussion Bill Mitchell Modern Monetary Theory

Here are the answers with discussion for this Weekends Quiz. The information provided should help you work out why you missed a question or three! If you havent already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

* This week (Tuesday, September 11, 1973) marked the 45th Anniversary of the day when right-wing forces aided by the US overthrew the democratically elected government Chile. It was a terrorist act we should continue to remember like other terrorist acts!

Question 1:

The IMF use their estimates of the Non-Accelerating Inflation Rate of Unemployment (NAIRU) to calibrate their structural deficit estimates. Accordingly, the structural deficits will typically be:

The answer is biased upwards.

This upwards bias indicates that at any point in the business cycle, that IMF will consider that the government fiscal stance is more expansionary than it actually is.

The question also has one qualifying aspect to it the use of the word typically which means that in conventional practice the answer is as given but there are circumstances where the statement would not apply.

We are seeing the use of the term structural deficit more often in the public debate as the weak recovery ensues and the talk has turned to credible exit plans for fiscal policy.

The mainstream position that fiscal outcomes should be balanced or in surplus (either over the cycle or always).

A structural deficit is the component of the actual fiscal outcome that reflects the chosen (discretionary) fiscal stance of the government independent of cyclical factors.

The cyclical factors refer to the automatic stabilisers which operate in a counter-cyclical fashion. When economic growth is strong, tax revenue improves given it is typically tied to income generation in some way. Further, most governments provide transfer payment relief to workers (unemployment benefits) and this decreases during growth.

In times of economic decline, the automatic stabilisers work in the opposite direction and push the fiscal balance towards deficit, into deficit, or into a larger deficit. These automatic movements in aggregate demand play an important counter-cyclical attenuating role.

So when GDP is declining due to falling aggregate demand, the automatic stabilisers work to add demand (falling taxes and rising welfare payments). When GDP growth is rising, the automatic stabilisers start to pull demand back as the economy adjusts (rising taxes and falling welfare payments).

The problem is then how to determine whether the chosen discretionary fi...

11:00

Australias Looming Subprime Crisis Daily Reckoning Australia

Its over.

The Aussie banks look toast. And the rest of Australia may be in for a financial crisis that could make 2008 look boring. House prices could plummet.

It sounds rather dramatic. But between the Royal Commission, finance consumer advocate Denise Brailey, and me, I believe we have a convincing case to put forward.

First, what would Australia stand to lose in such an event?

The big four banks make up a quarter of the ASX/200 stock market index today, having reached over 30% in 2015.

Both of those figures surpass the records other major economies set before their banking sectors collapsed. See for yourself.

Source: Australian Financial Review

The banks are massive. And for good reason. Average household debt has doubled since 2004, according to the Australian Bureau of Statistics.

Of Australias 200 wealthiest people, the number who list property as their sole source of wealth has doubled since 2011.

Australias wealth, whether its in the stock market or the property market, is by and large a giant punt on property prices.

But those property prices are falling.

Today, Ill show you why I believe thats the case. And why the lagging property market could spell economic doom for the entire country.

Australias sub-prime crisis is no longer a secret

In 2012 I began a PhD about Australias sub-prime crisis. It was quashed three months from the approved completion date after my fifth supervisor resigned.

My research back then exposed what the Royal Commission is confirming now. But the Royal Commission still hasnt quite cottoned on to what the implications are.

The ABC is reporting on a specific finding. The one that puts the whole economy at risk.

Westpacs robo-approvals process was exposed to the Commission.

Consumer advocate Denise Brailey has been saying for years that bank computers automatically approve loans, without questions asked.

That brings into question the quality of the information that mortgage brokers and applicants supply.

Now that borrowers and investors in mortgage backed securities have evidence that the banks approved loans without checking them, the banks could be open to lawsuits.

Thats not all.

According to Australian law, if you can prove your mortgage broker or banker manipulated your loan application form to get it past lending standards, theres evidence to suggest it  can force the bank to cancel your loan,but you get to keep your house.

Consider this for a moment. In the 2008 crash aftermath in Europe, people were held liable for their debts, no matter what.

In parts of America, they had jingle-mail. The borrower just sent the...

03:25

How Worried Should China Be About its Consumption Downgrade? Pacific Money The Diplomat

Whether there is a consumption downgrade remains debatable, but real threats are growing in Chinas economy.

01:35

Weekend reads - must see articles of the week Pete Wargent Daily Blog

And here they are at Property Update - or you can click on the image below.

Note my piece on Brisbane's rising house prices, which is an interesting bucking of recent trends. 


You can subscribe for the free Property Update newsletter here

Friday, 14 September

22:32

Nerdy Australian PM Pushes Blockchain Agenda to Take On Big Banks "IndyWatch Feed Crypto"

Australias newly-elected Prime Minister Scott Morrison is pushing his agenda of backing blockchain technology to disrupt and bring much tougher competition to the big banks and other sectors in the country. Speaking to reporters within weeks of being sworn in as Australias newest prime minister, Scott Morrison was asked [full clip below] about his position on

The post Nerdy Australian PM Pushes Blockchain Agenda to Take On Big Banks appeared first on CCN

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