Build to Let: The latest non-solution to a problem that should not exist.

The Australian Financial Review has been providing a lot of ‘supportive’ coverage for the promoters of the new  “Build to Let” housing model.

Now that it appears that Mr Scott Morrison is not keen on the ideal of handing out tax breaks to make “Build to Let” viable there have been howls of outrage from the hopeful rent seekers as their dreams turn to ashes.

To some extent the howls are understandable as Mr Morrison is usually very keen to promote asset price speculation with tax incentives like capital gains tax discounts for those mythical average “mum and dads” just trying to “get ahead”. Continue reading

Is Australia becoming a colony again? And who is the coloniser?

Colonialism is often in the news and as a ‘former’ colony Australians might have some sympathy for the Indian perspective presented by Shashi Tharoor for the affirmative side of this debate “Does Britain owe reparations”.

Or do we feel that although Australia was a colony of Britain for over one hundred years between 1788 and 1900 it was not like the other British colonies. Continue reading

APRA and credit creation regulation: Economic secret business

It is that day of the month when the RBA board meets to pluck some wings off bats, boil them with eyes of newt and distil the resulting mixture down to an interest rate decision.

Across the nation thousands pay close attention to every aspect of the

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deliberations and complete secrecy is maintained to ensure that everyone gets the news at exactly the same time.

But what about APRA and its regulation of credit creation by the Australian Banking sector?

Good question because while the RBA has a spotlight on every action it takes, APRA engages in regulation of economic activity, that has equally important effects on the Australian economy, in almost complete darkness.

Continue reading

Australia’s sick housing markets: Why we need a vacancy rate target of 4-5%

The latest “instant noodle” solution to Australia’s housing affordability crisis is “Build to rent”.

Rather than have “normal” people be able to buy a block of land in one of the largest and emptiest nations in the world and build their dream home, the new plan is to have mega corporations build cramped and congested skyboxes and rent them out.

A life time of renting for most Australians simply because our policy makers and politicians prefer that approach to actually trying to fix our demented and throughly broken banking and monetary system.

Whatever will they think of next?  Continue reading

Ending the era of speculation – An economic reform plan for the ALP and Australia

So the Turnbull government is blowing itself up day by day and poll by poll.

It seems as though fanatics in the government cannot wait for the policy ‘purity’ opportunities of being in opposition and are keen to accelerate the process of getting there.

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However, although the ALP have made some of the right noises in recent times and are doing well in the polls,  they are still a long way from capturing the zeitgeist and turning a growing dissatisfaction with the government into a definite preference for the ALP. The ALP are getting ‘warmer,warmer’ but run the risk of veering off into “stop – you are getting colder” territory at any moment.

The ALP are looking better but mostly because the LNP are looking so woeful.  A bit less chaos from the government and things (including polls) could turn around. Continue reading

Population Pressures: Why isn’t decentralisation working in Australia?

Decentralisation is only a pipe dream whilst we are running an economic model and strategy that has centralisation baked in.

Bernard Salt and George Megalogenous continually ignore what is driving the population concentration, beyond noting that immigrants seem to be voting with their feet.


Their lack of curiosity is remarkable considering the traditional,driver of concentration – labour intensive manufacturing has been on decline for decades and we have been retreating to an economic model based on minerals / agriculture with loads of real and financial asset sales. Not much of that particularly requires population concentrations in Sydney and Melbourne. Continue reading

Fed Watch:  Asset Swap myths, legends and other bulldust

A report in Bloomberg states that there is talk that the US Federal Reserve ‘might’ start reducing its $7 Trillion dollar mountain of mortgage backed securities.

This rumour concerns one of the biggest myths of the Federal Reserve response to the GFC / Great Recession.  That the Federal Reserve’s QE interventions in a range of markets were nothing more than an “asset swap”.


The modern banking and monetary apologists loved to roll out that myth “it’s just an asset swap” to justify why having an ‘independent’ Central Bank wade out into the market to ‘support’ its banking franchisees and the private-public monetary model was nothing for anyone to worry about. Continue reading

APRA Watch:  Bank regulation by smoke and mirrors

Today on Macrobusiness.com.au another excellent Deep T journey down through the house of mirrors that is APRA’s regulation of Australian private bank credit creation.

Unquestionably absurd.

If a casual observer thought this APRA regulatory stuff was impenetrable and made their head hurt it would be for good reason.

Source of the problem

The problems arise the moment that you accept that the IOUs or promises of a group of private organisations should be given a privileged or protected status that has real value. The moment you do that you have created an incentive for those organisations to create as many of those IOUs or promises as possible or they can get away with.

Gaming the regulations that apply to the privilege is core business for private banks. Continue reading

Balanced Budgets: What drives that mania?

The “balanced budget paradox” is an interesting paradox as the implications of it are obvious but many remain oblivious to them.

It would seem that hiding in plain sight remains an excellent strategy for our private banks.

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First off – a balanced budget ‘objective’ means that the government tries to tax as much as it spends. In other words for every dollar it pumps out into the economy by spending it extracts it back again by taxing. That raises an important question. If

the government succeeds in taxing back every dollar it spends what is left out in the wallets and bank accounts of the wider population? Continue reading

Australian Banks : The bit Anna Bligh does NOT talk about

Anna Bligh, in her new role in political retirement as spruiker in chief for the interests of the Australian private banks, gave a speech yesterday at the Australian Press club in Canberra. Watch it here.

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Macrobusiness.com.au

Macrobusiness.com.au reprinted, along with critical commentary and the cheeky graphic, a large chunk of the transcript of the speech here

However, amidst all the puffery and attempts to gild the Australian banker’s lily, Anna Bligh does get one thing right

“…In this context, there is an ever diminishing appetite for thoughtful and sensible public policy making. Any appetite there may once have been to explain the complexity and importance of banking to the Australian economy has been all but extinguished…”

Not that she tries to fix that herself as she does not a utter a single word in that speech that attempts to explain in clear and direct language Continue reading