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Monday, 23 October

20:04

Nuclear starts stop John Quiggin

A steady stream of negative evidence hasnt shaken the faith of believers in nuclear energy. Many of them are under the impression that the failure of nuclear energy is specific to the developed world, where some combination of environmentalism and NIMBYism prevents the adoption of an obviously sensible solution. It is widely imagined that China, India and other countries are forging ahead. This idea was plausible until fairly recently, but the latest evidence suggests that nuclear power is in terminal decline. Globally, only four nuclear plants commenced construction between 1 January 2016 and 30 JUne 2017. China hasnt started any new plants this year and is sure to miss the 58GW target set for 2020.

The problem, simply, is that while Chinas problems with delays and cost overruns have been less severe than those in the developed world, the same patterns are evident. New nuclear plants simply cant compete with renewables.

I dont expect that this will have the slightest impact on the Australian and US right, who have long since ceased to regard evidence as relevant to anything. But, for anyone who is still open to evidence, this debate ought to be over.

18:00

Plus500 Purportedly Subject to Litigation Over Allegations Of Rigging CFD Markets "IndyWatch Feed Crypto"

Plus500 Purportedly Subject to Litigation Over Allegations Of

Online trading platform Plus500 is reported to have become the subject of legal action, owing to accusations that the company has been rigging its contracts for difference (CFD) markets. Plus500 offer contracts for CFDs for shares, commodities, forex, and over half a dozen cryptocurrencies.

Also Read: With Bitcoins Price Above $6000 USD, Satoshi Nakamoto Should Be on Forbes Rich List

Plus500 Is Accused of Intentionally Delaying the Execution of Trade Requests

Plus500 Purportedly Subject to Litigation Over Allegations Of Luca Salerno, a representative of Giambrone, the European law firm that is currently preparing the class action lawsuit, discussed the class action against Plus500 with the Australian Broadcasting Corporation. We have more than 600 people who got in touch with us, and weve managed to turn 30 percent into actual claims, Mr. Salerno said. Plus500 is listed on the London Stock Exchange and offers trading products internationally through subsidiaries located in Australia, New Zeala...

16:52

The Share Market Becomes Redundant Daily Reckoning Australia

Traditional mortgage brokers might be starting to feel very nervous.

Their archaic way of arranging finance pay slips, spending estimates, and lots of paper shuffling are about to meet the 21st century. They better upgrade their processes or theyll be well on their way to redundancy.

The war to finance your next property is moving online.

The Australian Financial Review says HSBC Australia is leading the way with new technologies when it comes to mortgage settlement.

You might remember I mentioned HSBC a while back, because its pushing into the mortgage market with aggressive pricing.

The bank has now joined forces with a fintech firm that can speed up reporting, viewing and approving borrowers information.

Its about timeand there should be plenty more improvement to come across the whole sector.

Goodbye to the glory years

The old way of using client guesstimates for their spending is absurd when bank data is available to track spending down to the cent.

The known practice of fiddling with clients income and assets to make them more attractive to a lender should in theory be on the way out.

Or, at least, data cant lie in the same way.

And its not as if anyone really gives two hoots where the money comes from.

Make it fast, easy and cheap as possible.

HSBC is hardly alone in making this deal and carving out a new niche.

Westpac majority owns a mortgage comparison service called Uno Home Loans, which allows for online application and approval.

NAB and realestate.com.au now have a working partnership. Browsers on the website can get financing through that portal now.

CBA is using its subsidiary, Bankwest, as a testing ground for digital settlements.

ANZ just bought a tech start-up that offers price predictions for properties on the market.

Mortgage Choice now has a channel for you to go through on your smartphone.

All this can cut costs (good for the banks) and speed up the relevant timeframes.

Theres an estimated $2 billion in broking commissions paid out every year.

Thats a lot of money. And 50% of home loans go through a broker of some sort.

My view is that the banks will try to bypass the brokers as much as possible to save on commissions. New fintech firms will smash the old way of doing it.

Tread warily in this sector

All this has made me wary of recommending any stock in the credit space, despite the obvious growth in property finance.

Its one thing to be in a growing sector. You also have to be with the right company.

Ive not found anything Im happy with yet. But Im keeping my eye out.

Its interesting to me that Mortgage Choice Ltd [ASX:MOC] is not really doing much, price wise.

Its actually lower...

15:00

Australian Dollar and Bitcoin "IndyWatch Feed Crypto"

1.00 AUD = 0.0001 BTC
0.0001 BTC = 0.75 AUD
Converter

14:22

Solar Power Asia "IndyWatch Feed Economics"

Asia's ONLY Solar Power event with focus on ASEAN, North Asia, India, Australia and China

13:34

Time to nationalise superannuation in Australia even conservatives think so! Bill Mitchell billy blog

In our new book, Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) Thomas Fazi and I argue that that reversal of many of the neoliberal changes that governments have agreed to over the last three or more decades is not only possible but desirable. While many of our proposals exploit the legislative power that a democratic government clearly possesses (such as reregulating banking etc), other proposals directly rely on the currency-issuing capacity of the government. One such proposal is to create national pension funds (or superannuation funds in the Australian terminology), which provide an efficient and secure vehicle for workers to channel savings while working to improve their retirement prospects later in life. This idea runs counter of the neoliberal myth, which claimed that the market would be a better vehicle for creating institutions to manage workers saving and maximise pension entitlements. In Australia, we are now witnessing the indecent greed and major rip-off of workers that the market solution has delivered. Even one of the architects of privatised superannuation schemes, the former conservative Treasurer Peter Costello is seeing the folly of his work. In the UK Guardian article (October 13, 2017) Peter Costello calls for nationalisation of superannuation we learn that the former treasurer believes that Australias collective $2.3 trillion pension pot would be better invested by a government agency. The natives are getting restless!

I have written about the superannuation rip-off before Eliminating the great superannuation rip off.

The former treasurer told a superannuation conference in Melbourne (October 12, 2017) that in relation to the government running a national superannuation fund instead of the current situation where the big 4 banks (Costello calles them a quadropoly) run the industry and earn an enormous advantage:

There would be huge economies of scale. It would end the fight between the funds that have been unable to attract the money voluntarily

Compulsory superannuation has created an industry and delivered benefits for the young and ambitious and talented Australians work in it

But thats not really why it exists. It exists for those who are forfeiting their wages month-in, month-out on the expectation that 10 or 20 or 30 or 40 years of saving will get them benefits to enjoy in their retirement. As the system mat...

11:53

New Zealand Government flags changes for TPP-11 AFTINET

October 23, 2017: New Zealand Prime Minister-elect, Labours Jacinda Ardern, has said that walking away from the TPP-11 talks is not necessary, although she will push to secure a ban on foreign property speculators. This would mean a change to New Zealands investment schedule in the TPP-11 text. Labour had also previously raised concerns about the inclusion of the investor state dispute settlement (ISDS) in the TPP.

The 2016 select committee report on the original TPP agreement included minority dissents from all three parties in the new New Zealand Coalition government Labour, The Greens, and New Zealand First. At the time, none of the parties supported the ratification of the deal. Labour noted that they had no confidence in the economic benefits of the deal, and called for further modelling on the impacts the TPPA would have on employment and wage distribution. Since the withdrawal of the US from the TPP, there has been no new cost-benefit analysis of the deal, despite calls from critics like Professor Jane Kelsey.

The proposed NZ changes could further complicate talks when the TPP-11 meet in Japan next week to attempt to revive the deal.

11:35

Sandpit John Quiggin

A new sandpit for long side discussions, conspiracy theories, idees fixes and so on.

11:34

Monday Message Board John Quiggin

Another Monday Message Board. Post comments on any topic. Civil discussion and no coarse language please. Side discussions and idees fixes to the sandpits, please.

09:47

RCEP talks continue in South Korea AFTINET

Regional Comprehensive Economic Partnership (RCEP) trade negotiators have met this week in Incheon, South Korea, to continue talks. 

 

 

 

 

09:29

Mugabe scrapped as WHO goodwill ambassador..but why was he even chosen? "IndyWatch Feed Economics"

http://www.theaustralian.com.au/news/latest-news/who-rethinks-mugabe-goodwill-role/news-story/8378a96ae85eda9717704f9063f8412c

Zimbabwean President Robert Mugabe has been removed as a WHO goodwill ambassador, the World Health Organisation says.

WHO Director-General Tedros Adhanom Ghebreyesus, who made the appointment at a high-level meeting on non-communicable diseases (NCDs) in Uruguay on Wednesday, said in a statement on Sunday that he had listened to those expressing concerns.

Over the last...

07:40

CLINTON, ASSANGE AND THE WAR ON TRUTH "IndyWatch Feed Economics"

CLINTON, ASSANGE AND THE WAR ON TRUTH by John Pilger On 16 October, the Australian Broadcasting Corporation aired an interview with Hillary Clinton: one of many to promote her score-settling book about why she was not elected President of the...

The post CLINTON, ASSANGE AND THE WAR ON TRUTH appeared first on The Daily Coin.

07:39

10 ways to increase chi flow through our solar plexus "IndyWatch Feed Economics"

By Morag OBrien

Many people have talked recently of a sense of waiting, of anticipation. A buzz of excitement running through an otherwise bewildering world. This buzz can be felt in our core, our gut, our solar plexus. The sun is intrinsically linked to our solar plexus. Both exhibit golden light, both hold strength and power and both are instrumental in the life force of our planet and our mind body soul systems.

Photon blasts from the sun trigger solar plexus activation. This is about ours and Gaias sovereignty, strength, balance and free will. This is us powering up for the next phase of our evolution, full disclosure. Disclosure of alien contact, technology, ritualized depravity and mass mind control programming. These secrets are being bathed in light, no place to hide. The resultant requirement will be for humanity to rebuild and redesign our way of life. Our core is being zapped into life, as is Gaias to power us up for this transformation. Our planets solar plexus is at Uluru in Australia. Bathed in heat, solar rays and isolated from matrix pollution, Uluru is the power house of Gaia. Steeped in ancient legends of the indigenous Aboriginal people, it is mysterious, magical, ancient and powerful.

Photon blasts from the sun propel higher frequencies to wash over and through us and Gaia. The sun is one of the gear sticks of this accelerated evolution. It is life giving force in our galaxy. Worshipped, idolised, profoundly potent to our existence. As each new wave of photonic higher frequencies triggers our solar plexus, activation is occurring. Butterflies, tingles, sensitivity and knots of anxiety or excitement can be felt as the solar plexus clears. We can feel antsy, unsettled, contrary, irritable and tearful as the chakra is cleared. Karmic purge of our core is a step towards sovereignty, towards ownership of our mind body soul systems, taking back our free will.

Our balance, our connectedness as energetic beings flows through our solar plexus, if we have blocks we can feel dissociated from our realities. Our upper chakras are disconnected from the lower chakras. This can have one of two effects. We can be too grounded, deeply entrenched in matrix algorithms of control with our mind locked down. Or not grounded at all, floating off to hyper space, or down deep, dark rabbit holes of past trauma in our heads, we struggle with day to day routines. We can be passive or active players in our own evolution. To actively participate is to make...

07:17

Negative skew Pete Wargent Daily Blog

First-timers surge

It's been obvious that first homebuyers have been pouring back into the major housing markets since the beginning of July.

The housing finance figures, although to date only running to the end of August, confirm as much.


The September and October figures will warrant watching closely when they are finally reported. 

This is potentially only part of the story, though, with many parents now helping their offspring onto the housing ladder. 

Some parents may be cash buyers, while others may simply be financing purchases themselves. 

'Negative skewness'

It was pointed out on the Property Chat forum that although the median auction result in Sydney remained very high on Saturday at $1,295,000, the average or mean result was considerably lower at a shade under $1 million. 

Compare this with the same weekend last year when the mean value of properties sold at Sydney auctions was far higher at well above $1.3 million.

There's a similar trend afoot in Melbourne, albeit not nearly as pronounced.

What gives? 

When the mean is lower than the median - such as was the case in Sydney's auction results this weekend - this indicates a left-skewed distribution, or 'negative skew'.

...

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Sunday, 22 October

17:00

The Weekend Quiz October 21-22, 2017 answers and discussion Bill Mitchell billy blog

Here are the answers with discussion for yesterdays 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.

Question 1:

A hallmark of the neo-liberal period has been the declining share of wages in national income which in part meant that economic growth became more dependent on credit to maintain growth in consumption spending. Increasing the wage share requires a faster rate of growth in real wages in the coming years.

The answer is False.

A faster rate of real wages growth is not even a necessary condition much less a sufficient condition for a rising wage share.

Abstracting from the share of national income going to government, we can divide national income into the proportion going to workers (the wage share) and the proportion going to capital (the profits share). For the profit share to fall, the wage share has to rise (given the proportion going to government is relatively constant over time).

The wage share in nominal GDP is expressed as the total wage bill as a percentage of nominal GDP. Economists differentiate between nominal GDP ($GDP), which is total output produced at market prices and real GDP (GDP), which is the actual physical equivalent of the nominal GDP. We will come back to that distinction soon.

To compute the wage share we need to consider total labour costs in production and the flow of production ($GDP) each period.

Employment (L) is a stock and is measured in persons (averaged over some period like a month or a quarter or a year.

The wage bill is a flow and is the product of total employment (L) and the average wage (w) prevailing at any point in time. Stocks (L) become flows if it is multiplied by a flow variable (W). So the wage bill is the total labour costs in production per period.

So the wage bill = W.L

The wage share is just the total labour costs expressed as a proportion of $GDP (W.L)/$GDP in nominal terms, usually expressed as a percentage. We can actually break this down further.

Labour productivity (LP) is the units of real GDP per person employed per period. Using the symbols already defined this can be written as:

LP = GDP/L

so it tells us what real output (GDP) each labour unit that is added to production produces on average.

We can also define another term that is regularly used in the media the real wage which is the purchasing power equivalent on the nominal wage that workers get paid each period. To compute the real wage we nee...

15:31

Judaeo-Christian John Quiggin

My son Daniel pointed out to me a feature of Trumps speech to the laughably named Values Voters summit which seems to have slipped by most observers. As summarized by Colbert King in the Washington Post

Telling a revved-up Values Voter audience that he is stopping cold the attacks on Judeo-Christian values, Trump suggested to the crowd, which already thinks a war on Christianity is being waged, that invoking Merry Christmas is a way of fighting back.

But Happy Holidays is exactly an expression of Judaeo-Christian values, coined to embrace the Jewish Hanukkah as well as Christmas. In this context, Kings suggestion that Happy Holidays is secular misses the point. The majority of secular Americans celebrate Christmas (happily mixing Santa Claus, carols, and consumerism). They say Happy Holidays as a nod to religious diversity among believers, not because they feel excluded from Christmas.

I havent got to a proper analysis of this, so Ill turn it over to commenters.

06:46

Gizza job! Pete Wargent Daily Blog

How low can you go?

The New South Wales economy has added a stunning +123,800 full-time jobs over the past year.

And how low is the New South Wales unemployment rate now?

The answer is: very low at 4.6 per cent.

That's now equal to the lowest seasonally adjusted unemployment rate in 9 years for the Premier State.

And the way things have been tracking, it may not be all that long before the unemployment rate across across the state approaches the lowest level on record, across decades of data.


In February 2008 the state's unemployment rate fleetingly plummeted to just 4.2 per cent, if only for a month.

Casting one's mind back, that was an extraordinary time in Sydney's labour market.

With the mining boom in full swing, there was such a shortage of skilled labour that it felt at times you could get paid a bonus just for turning up to work, so fearful were employers of losing qualified staff.

Certainly pay rises were expected for tenure, while employees could easily leave a job in the full expectation of sourcing another position comparatively easily.

We're not seeing conditions anything like that just yet.

However, the Jobs Vacancies figures for New South Wales recently soared to the highest level ever recorded for any state or territory, suggesting that there may be further gains on the horizon. 

New South Wales is...'Making it Happen'!
...

02:30

Bitcoin Hits $6000 Australia Changes Bitcoin Tax Russia Creating CryptoRuble (Video) "IndyWatch Feed Crypto"

Bitcoin Hits $6000 Australia Changes Bitcoin Tax Russia Creating CryptoRuble Video The Money GPS Video Source

The post Bitcoin Hits $6000 Australia Changes Bitcoin Tax Russia Creating CryptoRuble (Video) appeared first on The Daily Coin.

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Saturday, 21 October

11:00

The Bubble that Could Break the World Daily Reckoning Australia

The key to bubble analysis is to look at whats causing the bubble. If you get the hidden dynamics right, your ability to collect huge profits or avoid losses is greatly improved.

Based on data going back to the 1929 crash, this current bubble looks like a particular kind that can produce large, sudden losses for investors.

The market right now is especially susceptible to a sharp correction, or worse.

Before diving into the best way to play the current bubble dynamics to your advantage, lets look at the evidence for whether a bubble exists in the first place

My preferred metric is the Shiller cyclically adjusted price-to-earnings ratio, or CAPE.

This particular P/E ratio was invented by Nobel Prize-winning economist Robert Shiller of Yale University.

CAPE has several design features that set it apart from the P/E ratios touted on Wall Street. The first is that it uses a rolling 10-year earnings period.

This can smooth out fluctuations based on temporary psychological, geopolitical and commodity-linked factors that should not bear on fundamental valuation.

The second feature is that it is backward-looking only. This eliminates the rosy scenario of forward-looking earnings projections favoured by Wall Street.

The third feature is that relevant data is available back to 1870, which allows for robust historical comparisons.

Check out this chart

The chart below shows the CAPE from 1870 to 2017. Two conclusions emerge immediately.

The CAPE today is around the same level as in 1929, just before the crash that started the Great Depression. The second is that the CAPE is higher today than it was just before the panic of 2008.

Neither data point is definitive proof of a bubble. CAPE was much higher in 2000 when the dotcom bubble burst.

Neither data point means that the market will crash tomorrow. But todays CAPE ratio is over 180% of the median ratio of the past 137 years.

Given the mean-reverting nature of stock prices, the ratio is sending up storm warnings even if we cannot be sure exactly where and when the hurricane will come ashore.

With the likelihood of a bubble clear, we can now turn to bubble dynamics. The analysis begins with the fact that there are two distinct types of bubbles.

Two things that can drive bubbles

Some bubbles are driven by narrative, and others by cheap credit. Narrative bubbles and credit bubbles burst for different reasons at different times.

The difference is critical in knowing what to look for when you time bubbles, and for understanding who gets hurt when they burst.

A narrative-driven bubble is based on a story, or new paradig...

04:55

Foreign Investors Jittery Amid Myanmars Rohingya Crisis Pacific Money The Diplomat

Western companies have been slow to exploit opportunities in Myanmar, especially as the Rohingya crisis worsens.

Friday, 20 October

11:00

Warren Buffetts Clue for Todays Market Daily Reckoning Australia

Todays Daily Reckoning begins with a tip to preserve your capital. Dont short stocks going up in price!

If youre not familiar with shorting, its when you hope to profit by a share going down in price.

And your downside is the inverse of whats normal.

If the share youre betting against starts rising, youre on a losing trade. Thats because you have to buy it back at a price higher than your initial position.

Thats what must be happening to a few fund managers right now and giving them night sweats or cold shivers, if not both.

Lithium stock Galaxy Resources Ltd [ASX:GXY] currently has 11% of its shares sold short at the moment. Its just off the top 10 list for the most shorted stocks on the market.

Heres the catch for those betting against it

Your downside with shorting is over 100%

Galaxy is up 123% since the end of August. Ouch.

I dont see it going down anytime soon, either.

The demand around lithium is too big, in my view, to take a position against this kind of stock.

Now, theres always something that could be amiss in the company itself.

Maybe these short sellers are seeing something others are not.

Or maybe theyre just wrong.

For the moment, the market is quite clearly telling those shorting Galaxy that they are wrong, and the outlook for Galaxy is getting better, not worse.

It does not make sense to go against the market on the assumption youll be proved right at some point.

Institutional investors may have the resources to hold a losing position for a long time. You and I do not.

We all have limited capital, and need it working for us every market day.

Holding a losing position is also never nice, and chews up your financial and mental resources dealing with it.

Your job is to avoid this as much as possible.

The easiest way to do that, if you want to find a short trade, is to look at stocks going down already.

Makes sense, doesnt it?

 

Go with the trend as much as possible, unless you have a very clear reason for not doing so.

Still, shorting is not for everyone.

Were naturally more inclined to go long in the market looking for stocks that go up.

And the same thing applies heredont look for stocks going down, look for ones going up!

Stock markets are healthy worldwide

The good news is the Aussie market is looking bullish. There are more stocks rising than falling.

That makes our job easier.

The same is true of the US.

This is good news. It shows the market is healthy and not being propped up by a few big stocks lifting the indexes higher.

Heres another couple of points you might like to consider when it comes to the health of stock markets around the world.

I keep seeing the Shiller P/E ratio (also called the CAPE, or cyclically adjusted price-to-ea...

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