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Monday, 17 September

19:32

Precarious private balance sheets driven by fiscal austerity is the problem Bill Mitchell Modern Monetary Theory

The media has been giving a lot of attention in the last week to the 10-year anniversary of the Lehman Brothers crash which occurred on September 15, 2008 and marked the realisation, after months of denial, that there was a financial crisis underway. Lots of articles have been published recently about what we have learned from this historical episode. I thought that the Rolling Stone article by Matt Taibbi (September 13, 2018) Ten Years After the Crash, Weve Learned Nothing pretty much summed it up. We have learned very little. Commentators still construct the crisis as a sovereign debt problem and demand that governments reduce fiscal deficits to give them space to defend the economy in the next crisis. They are also noting that the balance sheets of the non-government sector components households and firms are looking rather precarious. They also tie that in with flat wages growth and a run down in household saving. But the link between the fiscal data and the non-government borrowing data is never made. So we are moving headlong into the next crisis with very little understanding of the relationship between government and non-government. And we are increasingly relying on private sector debt buildup to fund growth as governments retreat. Everything about that is wrong.

The recently published book Financial Exposure: Carl Levins Senate Investigations into Finance and Tax Abuse (Palgrave Macmillan) by Elise J. Bean is worth reading. Elise Bean was an investigative lawyer for the US Senate Permanent Subcommittee on Investigations (PSI).

The book recounts the workings of the PSI.

We read that the PSI has:

faced down corrupt bankers, arrogant executives, and sleazy lawyers. Wed confronted tax dodgers of all stripes, from billionaires to multinationals. Wed interviewed crooks in prison, North Korean representatives, and tax have operatives. Wed protected whistleblowers, championed victims, and defended honest government employees battling abuses. Wed stood up to dirty tricks, assaults on PSIs bipartisanship, and attacks on our bosses.

Never was this environment more loaded than when they started looking into the financial services sector.

The chapter on Deconstructing the Financial Crisis is particularly interesting, given the current attention the decade-anniversary is receiving.

Elise Bean writes that the investigation was the longest, toughest inquiry the PSI under Carl Levin had ever undertaken.

The facts were tangled, the players powerful, and the stakes huge.

She credits the legislative action that led to the Dodd-Frank Act, the most extensiv...

18:22

Record permanent & long-term arrivals to Australia Pete Wargent Daily Blog

Record arrivals to Australia

Some 101,900 permanent and long-term arrivals into Australia in July 2018.

That's the third individual month where the figure has exceeded 100,000 - all of which were in the past 18 months - and it sends long-term migration to a new record high of +818,430 over the year to July.


Tighter lending standards and mortgage scrutiny may have cooled housing markets, but the underlying demand for housing hasn't cooled. 

In fact, it's now rising to or at record highs.

Record tourism too

Tourism is also booming, with record high short-term arrivals over the year to July 2018.

In seasonally adjusted terms there were a massive 126,000 visitors from China in July, which is the highest ever figure for Chinese visitors (in original or unadjusted terms there are more visitors over Lunar New Year). 

China is huge, but it's also an Asian tourism boom.


Big, big, big numbers.

12:00

The Profitable Cracks in the Lithium World Daily Reckoning Australia

Holy moly. All eyes in the small cap mining space will be reading the latest announcement from Kidman Resources Limited [ASX:KDR] today. This could set a new tone for the lithium market for the next six months.

Kidman went into a trading halt last week and shocked everyone. Thats because it may lose the right to develop its Mt Holland lithium project in Western Australia over an obscure issue.

This is a nervy wait if you happen to hold any shares. But anyone in any other lithium play will be on their knees, praying it happens. It would make supply even more tight than it is right now. Theres no sympathy in the market.

What gives, anyway? Mining tenements in Western Australia come with minimum spending obligations. A WA state ruling has now recommended refusing Kidmans request for an exemption from this.

Kidman shares sold down as it prepares to fight ruling

Who cares?

Well, these tenements could be under threat from other companies who claim them because of issues with their former owner. As I write this, the stock is down 13% in the first hour of trading.

Kidmans joint venture partner in Mt Holland is Chilean firm SQM. Management there have already issued a statement, saying this may delay the project.

The decision now lies with the WA Minister for Mines and Petroleum, Bill Johnston, who can grant the exemption from his office, regardless of the advice hes now received from his bureaucrats.

Odds are on the minister finding a way for the project to go ahead. Theres a lot of capital spending and jobs at risk here. To cut off a major project over this seems insane.

For example, an investment decision is due before 2019 on Kidmans proposed WA lithium hydroxide refinery. This is part of WAs Lithium Valley idea the state is now trying to push.

This kerfuffle does highlight a major issue when it comes to lithium in general. Thats the assumption that all projected mines and projects will come into being and on time, on budget and with no setbacks.

Thats a dangerous assumption. Already weve seen South American expansion plans be brought into question over water rights and now this.

There are a lot of lithium projects staked out in various forms all over the world. But permits, environmental clearance, financing and competent staff dont just appear from nowhere.

Now, we have the situation where battery especially lithium stocks have sold down hard since late last year, based mostly over fears of an oversupply developing. That means cheaper values.

But is it worth the risk scooping some up now?

Well, look at what BMW is signalling right now. Reuters reported just yesterday that the company is planning more deals with mining companies to secure battery materials.

It appears BMW wants to get this sorte...

11:35

Adani on life support John Quiggin

I have a piece in The Guardian under the headline Adanis rail line cut shows project is on life support but still a threat to climate, starting with the observation

The recent announcement by Adani that it will halve the costs of its rail line to the proposed Carmichael coalmine by building a shorter, narrow-gauge line raises an obvious question: if such a massive cost-saving is feasible, why didnt Adani go that way in the first place?

I also address the broader question

If coal is doomed, why has the price recoverd

11:26

Sandpit John Quiggin

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

11:26

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.

If you would like to receive my (hopefully) regular email news, please sign up using the following link

06:43

It's showtime Pete Wargent Daily Blog

Showtime for Brisbane

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

Voil 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.

Chartfest

Also an exhilarating week ahead, including an Aussie residential property prices Chartfest on Tuesday wherein I'll take a look in some detail at what has played across across the 8 capital cities over FY2018 by dwelling type. 

Fair warning for Tuesday: you can take any media report that mentions a 'record crash' in dwelling transactions and stuff it directly into the thunderbox.

Annoyingly this happens every quarter, of course, because the reported numbers are preliminary and thus incomplete (as anyone with a brain that analyses numbers would intuitively know). 

I have quite a significant international blog readership these days, so I'll try to add a bit of texture too, to explain why the different capital cities are behaving as they are. 

Stay tooned!

06:20

Australia Quake, Magnetic Antarctica, Penetrating Fields (Video) "IndyWatch Feed Economics"

Australia Quake, Magnetic Antarctica, Penetrating Fields Video Suspicious Observers Video Source

The post Australia Quake, Magnetic Antarctica, Penetrating Fields (Video) appeared first on The Daily Coin.

Sunday, 16 September

22:00

Block School: Satoshis Vision "IndyWatch Feed Crypto"

BLOCK SCHOOL

Here at NewsBTC we believe that education and knowledge is fundamental to the wider adoption of cryptocurrencies and growth of the blockchain industry. We will be expanding our education section by delving deeper into some of the machinations and technology behind the blocks. Our weekly articles aim to provide a greater understanding of how things work in the crypto ecosystem.

A Peer-to-Peer Electronic Cash System

Following a number of attempts at a digital currency, the most successful being B-money, the enigmatic Satoshi Nakamoto began working on his whitepaper in 2008. In October of the same year it was published, titled Bitcoin: A Peer-to-Peer Electronic Cash System.

The nine page paper outlined the design and justification for a digital currency with the intention of doing what no other attempt could do before: create an anonymous, trustless, decentralized currency.

What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers.

The proof-of-work protocol was developed from Dai Weis B-money in order to enforce a one CPU one vote policy as outlined by Nakamoto in his now famous paper. Unlike traditional money, Bitcoin was also designed to be a deflationary currency, meaning that there will only be a limited amount of them that will ever exist, specifically 21 million. The reward miners get for finding each new block decreases over time and is halved every 210,000 blocks, approximately every four years. It started off at 50 BTC and is currently 12.5 BTC.

Satoshi was not fond of the modern banking system, particularly fractional-reserve banking whereby a bank accepts deposits, makes loans or investments, but is required to hold reserves equal to only a fraction of its deposit liabilities.

According to Wikipedia, Nakamoto claimed to be a man living in Japan, born on 5 April 1975. The true identity remains a mystery however there has been se...

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.

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