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Wednesday, 18 July


Priming the pump Pete Wargent Daily Blog

'Declining moderately'

An interesting little snippet from the Reserve Bank's Board Minutes yesterday. 

One might reasonably expect that the Reserve Bank is quite happy with Sydney prices declining by about 5 per cent over the past year, following a strong run. 

There's been a bit of odd discussion and reporting of these trends in recent weeks.

The most expensive sectors of the housing market by price decile do tend to be 'thinner' and more illiquid, and as such they do indeed tend to be more volatile through the cycle. 

But it's worth noting too that if the median price is down by 5 per cent, then that's the change in the median price; it can't all be driven by the top end or 'prime' properties!

The RBA is obviously clear on this point; not so sure about the burgeoning market commentariat, though!

There was also some interesting discussion of household debt trends, a subject that has been of considerable interest, both in Australia and overseas

Jobs preview

A bit of a slow news day, then, evidently!

But a big release is due out tomorrow morning relating to the labour force, with the market anticipating a modest increase in employment. 


Largest Bilateral Free Trade Agreement: Japan, EU Conclude Bilateral Economic Partnership Agreement Pacific Money The Diplomat

The agreement will see nearly all tariffs on goods traded between the two sides lifted.


Debt Rattle July 18 2018 "IndyWatch Feed Economics"

Paul Gauguin Van Gogh painting sunflowers 1888   Russia Dumped Most/All Of Its US Treasury Holdings, Disappeared from List (WS) Japan, EU Sign Trade Deal To Eliminate Nearly All Tariffs (AP) Going, Going Gone For Australias House Price Boom (R.) Australias Expensive Real Estate Problem Remains A Dirty Little Secret (D.)

The post Debt Rattle July 18 2018 appeared first on The Automatic Earth.


Limits to government spending are not determined by private bond markets Bill Mitchell billy blog

Wednesday and a relatively short blog post after two rather long posts in the preceding two days. The first topic concerns the limits to government spending. The second brief topic reports on research where it was found that the music of AC-DC confounds Lady Beetles and soybean aphids. Who would have thought! Which was by far the most interesting research paper I have read this week after dealing with the likes of Stuart Holland on Monday and Tuesday. And then some music from around the world to smooth out the day.

Limits to government spending

There was a tweet being retweeted like there was no tomorrow last week which linked to an article in the Financial Times (July 14, 2018) Fiscal hawks tales of doom do not fly with the young.

The article had a picture of the latest progressive political star Alexandria Ocasio-Cortez with the caption that she:

backs the view that restraints on a governments spending are primarily set by the amount it can borrow without fuelling inflation.

Progressive types then thought it was useful to retweet this incessantly for a few days.

My response I certainly hope that Alexandria Ocasio-Cortez does not back that construction of the limits on spending for a currency-issuing government.

And I certainly hope that progressives do not embrace it either.


It is fundamentally incorrect and just reframes the way neoliberals think and uses their sort of language.

The article was questioning the:

warnings from some fiscal hawks about how financial markets would be overwhelmed by the wave of government bonds needed to fund the stimulus.

It noted that the evidence has not supported the fiscal hawk scaremongering.

It asks: Where are the storied bond vigilantes?

It also correctly notes that:

Because the US borrows in its own currency, warnings about too much Treasury issuance are in reality about two spectres: harmful increases in inflation, or a dose of political mismanagement so severe it would lead to a technical default by the US.

The technical default refers to the ridiculous process where the US Congress approves increases in the debt ceiling. The theatre around that process might one day see the US government run out of money because the politicians have legally forced it to.

Of course, that process doesnt negate the fact that the US government can never run out of US dollars if it doesnt want to. We cannot say the same thing about, say, a Eurozone Member State government.

And it says that the deficit hawks:

have now educated a generation in the risks of dogmatic...


Australias waste crisis: Where are the solutions? "IndyWatch Feed Economics"

Trash is piling up in Australia as China's ban on waste imports takes effectwhat will the waste and recycling industry do? This is one of the many critical issues that will be discussed at the upcoming Australasian Waste & Recycling Expo.


Australian Dollar and Bitcoin "IndyWatch Feed Crypto"

1.00 AUD = 0.00010 BTC
0.00010 BTC = 1.00 AUD


Day of Mourning Manus/Nauru Sustainable Living Armidale

[ Thursday, 19 Jul; 10:00 am to 11:00 am. 12:30 pm to 1:30 pm. ] Armidale Rural Australians for Refugees are holding two silent vigils on Thursday 19th July. On 19 July 2013, PM Kevin Rudd said "From now any asylum seeker who arrives in Australia by boat will have no chance of being settled in Australia as refugees." As a result many people have been kept on Manus Island and [...] full article 


Australian venture taps 'migrapreneurs' for cleantech solutions "IndyWatch Feed Economics"

Migrants and refugees often face bleak job prospects in Australia. Sydney-based accelerator programme Catalaysr wants to coach migrant-run start-ups to create employment and deliver solutions the world needs.


Decentralised Capital Launches Australias First Cryptocurrency Vault "IndyWatch Feed Crypto"

Blockchain and investment company Decentralised Capital has announced the launch of Australias first ever cold storage vault for digital assets. The vault was created in partnership with Custodian Vaults, a subsidiary of precious metals firm Pallion Group. According to Stephen Moss, founder and director of Decentralised Capital, the new crypto vault is expected to take Continued

The post Decentralised Capital Launches Australias First Cryptocurrency Vault appeared first on CCN


The US Dollar: A Victim of Its Own Success Daily Reckoning Australia

Americas most powerful weapon of war does not shoot, fly or explode.

Its not a submarine, plane, tank or laser.

Americas most powerful strategic weapon today is the dollar.

The US uses the dollar strategically to reward friends and punish enemies. The use of the dollar as a weapon is not limited to trade and currency wars, although the dollar is used tactically in those disputes.

The dollar is much more powerful than that.

The dollar can be used for regime change by creating hyperinflation, bank runs and domestic dissent in countries targeted by the US. The US can depose the governments of its adversaries, or at least blunt their policies without firing a shot.

Before turning to specific tactics, consider the following:

The dollar constitutes about 60% of global reserves, 80% of global payments and almost 100% of global oil transactions. European banks that make dollar-denominated loans to customers have to borrow dollars to fund those liabilities.

Those banks do their borrowing in the eurodollar deposit market, or with dollar-denominated commercial paper or notes. Being based in Switzerland or Germany does not allow you to escape from the dollars dominance.

The US doesnt just control the dollar itself. It controls the dollar payments system. This consists of the Treasurys digital ledger of holders of US debt, the Fedwire payments system among US Fed member banks and the Clearing House Association (successor to the New York Clearing House and proprietor of CHIPS, the Clearing House Interbank Payments System) composed of the largest US banks.

A dollar payment going from a bank in Shanghai to another bank in Sydney runs through one of these US-controlled payments systems.

In short, the dollar is the oxygen supply for world commerce and the US can cut off your oxygen whenever it wants.

The victims of financial warfare

The list of ways in which the dollar can be weaponised is extensive.

The International Emergency Economic Powers Act of 1977, IEEPA, gives the president of the United States dictatorial power to freeze and seize assets and block payments.

The Treasurys Office of Foreign Assets Control (OFAC) maintains a blacklist of individuals and companies with whom financial intermediaries, such as banks and credit card companies, are forbidden to transact. Individuals on the OFAC list are like dead men walking when it comes to travel and business.

The Committee on Foreign Investment in the United States (CFIUS) can block any foreign acquisition of a US company on national security grounds.

This list of financial weapons goes on, but you get the idea. The US uses the dollar to force its enemies into fronts, crude barter or the black market if they want to do business.

Examples of the US employing these financial weapons are ubiquitous.

The US slapped sanc...


Sustainable Living Armidale

Many people in the community have often asked me why we continue to use the black crate recycling system instead of moving to the co-mingled yellow lid recycling bins used by many other jurisdictions. At Council and with the support of our recycling contractor Armidale Recycling Services, we have continued to advocate the benefits of [...] full article 


Plastic straw free Bello Winter Music Fest Sustainable Living Armidale

Bellingen went plastic straw free for the Bello Winter Music weekend thanks to the efforts of Waste Not Bellingen. Thanks to all the amazing businesses that have pledged to reduce their single use plastics! full article 


Future Learn: Volunteering with Refugees Sustainable Living Armidale

I have done a free online course offered through Future Learn that I found very interesting and useful. While I have not done Volunteering with Refugees, I believe it will certainly have something helpful for those who choose to do it. It is a commitment of only a few hours per week. By: Susan M full article 

Tuesday, 17 July


Big Four Giant PwC Director Quits, Joins Cryptocurrency Exchange as CEO in Australia "IndyWatch Feed Crypto"

A director at big four accounting giant PricewaterhouseCoopers (PWC)  in Australia has quit the firm to join crypto exchange as its newest CEO. Ben Ingram left PwC Australia back in March, where he was responsible for digital strategy, accounting and consulting, as its director before taking over the exchange as its chief executive, Business Continued

The post Big Four Giant PwC Director Quits, Joins Cryptocurrency Exchange as CEO in Australia appeared first on CCN


Skyfall? Pete Wargent Daily Blog

Live on Sky News tonight discussing the housing market and what happens next.

If you miss it, catch the repeat on Saturday, or catch up with it all online at the Sky News Australia app.


The abdication of the Left redux Part 2 Bill Mitchell billy blog

This is the second and final part in my response to the Social Europe article by Stuart Holland (July 11, 2018) Not An Abdication By The Left where he attempts to eviscerate various writers who have dared to suggest that the social democratic Left in Europe has run out of ideas or that there has been an intellectual abdication by the Left. He uses his experience as an advisor to Harold Wilson in the 1960s and to Jacques Delors in the early 1990s as an authority for his rejection of the claims that the Left has abandoned its social democratic remit. He holds the likes of Delors and Antnio Guterres has shining Left lights. In Part 1, I showed that the view that Delors and Guterres are beacons of Left history and that the social democratic Left has not sold out to the neoliberal orthodoxy (particularly at the political level) is unsustainable. Holland distorts history to suit his argument and is in denial of the facts. In Part 2, I trace the argument further by examining the 1993 Delors White Paper, which was meant to be the European Commissions response to the mass unemployment that was bedevilling the Continent at the time (and remains, by the way) and later propositions that Holland was associated with in relation to Greece during the GFC. They further demonstrate that Stuart Holland is attempting to maintain an indefensible position.

The Delors White Paper

As part of his claim for progressive credentials but also more generally to claim that the likes of Jacques Delors and the privatising Antnio Guterres were part of the grand social democratic Left tradition throughout their working lives, Stuart Holland refers to the Delors White paper Growth, competitiveness, employment: The challenges and ways forward into the 21st century which was published on December 5, 1993 as the European Commissions response to mass unemployment.

The White Paper was published in the following context.

The graph shows unemployment rates in 1993 (red triangles) and 1994 (blue bars) for a selection of nations, mostly comprised on what would become the Eurozone.

The data is from the OECD and while the Euro area was not yet in operation the OECD provided estimates post Maastricht of that bloc in addition to the entire OECD membership.

I included Japan and the USA for comparative purposes.

The point is that mass unemployment was at very high levels in many European nations and was rising between 1993 and 1994 in most.

It coincided with a major recession in the early 1990s, which impacted on most nations. However, while, for example, the US began growth again in 1993 and Japan endured its massive...


When is a record not a record? John Quiggin

Its been  cold here in Brisbane for the last few days, at least by our subtropical standards, with overnight minimums of 6 degrees in the city, and negative temperatures in  towns like Stanthorpe in the nearby Granite Belt. That occasioned lots of news coverage, with the observation that this was the coldest temperature weve had since 2014 and one of the coldest since 2000. The same was true for much of Eastern Australia. Melbourne had its coldest morning in several years, and  a couple of towns in NSW had the lowest minimum for several decades.

All of these are records in the trivial sense that we record the temperature every day, but none of them are records in the commonly used sense of lowest (or highest) value in the relevant record. That didnt stop the usual denialist suspects claiming a RECORD (all caps in original) and evidence of global cooling. The Daily Mail  claimed Australias east coast shivers through its coldest EVER morning even though the sub-headlines made it clear this wasnt true.

Whats striking here is that the same people who are willing to claim that the Bureau of Meteorology is part of a world-wide warmist conspiracy to doctor climate records are eagerly credulous about any piece of data that suits their case. Next time we get record heat, the conspiracy theories will be wheeled out again, but for now the Bureau is an unquestionable source of scientific evidence.

To take this news a little more seriously, its important to remember that there are vast numbers of records that can potentially be broken on any given day highest and lowest maxima and minima, for a given month, in any location where weather is recorded. That means we need either to confine attention to a limited number of records most obviously mean global temperatures or look at statistical measures, such as the relative frequency of new records for cold and heat. Both of these measures give the answer that is by now obvious* from experience: the climate globally and Australia is getting warmer.




Australian Dollar and Bitcoin "IndyWatch Feed Crypto"

1.00 AUD = 0.00010 BTC
0.00010 BTC = 1.00 AUD


How China Could Cripple the US Dollar Daily Reckoning Australia

How does the US solve a problem like China?

More to the point, how does China solve a problem like the US?

Tensions between the two biggest economies in the world are high.

President Trump appears keen to tariff China into submission.

Chinese authorities, on the other hand, have taken a reactive approach to Trumps attacks.

Meanwhile, the media fixates on the misguided idea that Trump has the upper hand in the tit-for-tat trade war. Thats due to the trade imbalance that exists between the two trading partners.

The US buys a massive $631 billion from China. Thats three times the $155 billion of goods China imports from the US.

But what if Trump and the media at large has vastly underestimated what China can do to retaliate?

No, China may not be able to out-tax the US. But the Middle Kingdom can take seemingly small actions that could have catastrophic consequences for the US dollar.

The unofficial trade war became somewhat more official a fortnight ago when Trumps $45 billion in proposed tariffs on specific goods went into effect.

Within hours, China made good on its promise to fire back, implementing $45 billion in retaliatory tariffs.

But there could be more to come.

Bloomberg reports that Trump is reloading his tariff war bazooka and has another $291 billion in duties lined up.

While President Trump has denied that the spat is a trade war claiming it a matter of national security the application of one tariff followed by a retaliatory tariff is in fact the technical definition of a trade war.

With another $291 billion in tariffs on the cards, China doesnt have as much room to continue with retaliatory tariffs.

Or does it?

Sinking a currency to win a trade war

Early in Trumps election campaign, he was keen to label China a currency manipulator.

And hes not wrong.

The yuans value is fixed to the US dollar. But Chinas central bank, the Peoples Bank of China (PBoC), allows the yuan to rise or fall 2% from the previous trading days closing price. If the yuan looks like moving more than that in either direction, the PBoC has the power to step in and halt trading.

Thats currency manipulation, irrespective of how Chinese authorities choose to dress it up.

In August 2015, the PBoC reset the yuan to start the trading day 1.9% lower than the day before. This was the biggest one-day yuan reset in memory. That one instance of interference caused global markets to tumble for the rest of that month.

The next yuan devaluation came in January 2016. That was when Chinese authorities abandoned the 2% fall circuit breaker.

In other words, when the yuans value fell during trade by 2% or more to the US dollar, the PBoC didnt step in to fix things.

Given that China cant out-tariff the US, allowing the yuan to weaken agains...


Sydney vacancy rate jumps Pete Wargent Daily Blog

Sydney vacancies rising

The latest building activity figures confirmed that the record number of apartments under construction in Sydney is now morphing into a surge in completions.

June is always a seasonally soft month for rental markets, but the latest release from SQM Research recorded a vacancy rate jumping all the way to 2.8 per cent for Sydney.

That's well up from 2 per cent a year earlier.

Vacancies were very high in the Hills District at 4.9 per cent.

But the inner suburbs have by no means been immune as apartments complete across the city. 

There's a certain seasonal aspect to this.

Indeed, Australia's capitals are becoming more seasonal than ever with net overseas migration peaking in the warmer months, and hundreds of thousands of international students coming and going in recent years - but there's also high level of new supply for the city to deal with.

Around the traps

Melbourne's vacancy rate was just 1.6 per cent in the month of June 2018.

However, Melbourne now has more dwellings under construction than at any time in its history, as well as a range of transport, infrastructure, and commercial projects. 

Nationally, the vacancy rate declined from a year earlier from 2.5 per cent to 2.3 per cent, representing a decline from 78,314 to 75,757 vacancies. 

There were year-on-year declines in Perth, Adelaide, Canberra, and ev...


Investors Fret as Dutertes Popularity Slumps Pacific Money The Diplomat

Will Duterte's crass and unpredictable style impact the Philippine economy?

IndyWatch Australian Economic News Feed Archiver

Go Back:30 Days | 7 Days | 2 Days | 1 Day

IndyWatch Australian Economic News Feed Today.

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