RBA Watch:   Westpac says DONT cut teh rates! OMG

Bill Evans, long time RBA twitcher, is harbouring some doubts (click link) about the wisdom of the RBA Board cutting the target rate further next Tuesday.

What’s up Bill?

Why are you suddenly talking about households buried in debt and the mountain of foreign debt (“external liabilities” if the word debt is a bit strong and you prefer to see something shiny when strolling through the paddocks).

Are you trying to scare the smashed avocado munchers (the ones like Bernard who can munch with abandon not guilt)?

Anyways this attack of bats from Bill’s belfry attracted some comments at regular Glass Pyramid leaning post – Macrobusiness – and they are reproduced below for your enjoyment Continue reading

Bank Watch:    Westpac raising the heat on non-resident /foreign Australian housing speculators?

So Westpac is going to charge non-resident borrowers a bit extra on their speculations in Australian property.

The very idea that our local banks would be extending credit to non-residents to speculate on Australian property is as insane as it sounds.

Why on earth do we want non-residents being extended credit by our banking system to acquire existing property?

Even if the non-resident is interested in buying a brand new off the plan property it does not make sense to be extending them ADI credit.

This is especially the case when our local ADIs are running offshore to borrow to support the “low rates” of their mortgage operations.

Only a nation of complete nutters would allow their taxpayer guaranteed TBTF banking system to expand their external liabilities (foreign debt) for the purposes of allowing foreigners to have a punt on residential house prices Continue reading

How to stop the “currency wars” from destroying the Australian economy (…any more than they already have)

This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

Houseless,

A fiat currency regime is not a WMD  because it is easy for a country like Australia to defend itself from currency warriors by regulating the capital inflow transactions that the capital warrior uses.

A currency warrior can only hold down the value of their currency relative to other currencies like the Australian dollar if they export capital – i.e buy off-shore assets – real or financial.

The reason is simple – Continue reading

The Dad’s Army of Oz Economics are befuddled.

An excellent read at Macrobusiness this morning

But on this occasion, I am a bit biased

“And is keeping that spiggot open a solution, Gotti? Self-evidently, not.

It’s not the content of these ramblings that matter, it’s the tone and narrowness of the perspectives. These are clunking cogs spinning off axis in a failing machine. Commenter Pfh007 summarised it beautifully this morning:”

Also in slightly modified form 

Economics: The BOS index (beads of sweat) is reaching new highs

This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

Expect things to get very incoherent as a defunct economic model (neo-lib attitudes to trade and capital flows) crashes into the politics of recession (worried locals without enough income to pay their debts and buy the necessities).

Exhibits

  1. Mr Robb signing predatory capital inflow facilitation agreements (FTAs) to assist the FIRE industries that export – capital assets, industry, land and financial claims on public and private income AT THE SAME TIME as Continue reading

Land mines on the road to ZIRP

This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

Excellent.

However, the final reel of this movie is much more exciting than you suggest.

Keep in mind that the point of these interest rates cuts by Central Banks is not about another platoon of export industry factory workers heading off to the currency wars.

It is about Continue reading

If only the public debate about the economy could move on to solutions.

This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

Unfortunately, while the end of the neo-liberal monetary policy epoch – including the outsourcing of economic management to ‘independent’ Central bankers – is crumbling before our eyes and is obvious to just about everyone who visits these pages or takes more than a passing interest in economics, that fact is only starting to be understood out in the broader economic community.

The general public have no idea.   The politicians have no idea – just beads of sweat and an ongoing feeling of panic.

Continue reading

Quarantine Breakdown: Infected capital imports are just as bad as infected berry imports.

This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

It is not really surprising that we are finding diseased, and unhealthy goods entering the country considering the open door policy we currently have with regard to unhealthy and unproductive capital inflows.

What is ironic is that we actually have more regulations restricting the entry of local goods into the market.  In effect we have quasi quarantine laws that ONLY apply to domestic goods.  Liberalising trade is a good thing providing that two things are kept in mind.

Continue reading

Land use restrictions give regions the rough end of the stick.

This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

Land use restrictions should be relaxed right across the country.

Rather than the current approach where a use is banned unless it is permitted a better approach is that all uses are permitted unless they are specifically banned. That would allow change of use as needs change except for changes to the small category of restricted or banned uses.

Continue reading

Govt – Land Banker (Gouger) in Chief

This comment was made at Macrobusiness  (link may be locked – but there is a free trial available)

The worst land banking offender is the govt.

Ever since the model of outsourcing government expenditure to the household balance sheet was adopted in the mid 1990s, governments have worked hard to:

1. Keep the housing hold debt carrying capacity nice and fat by restricting supply – and if desperate importing demand from foreign buyers.

2. Come up with more inventive ways of extracting from household wallets as much of the debt taken on as possible.

Continue reading