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Friday, 24 November


Corridor of uncertainty "IndyWatch Feed"


As a cricket tragic, I was thrilled a little over a year when we named our son Stanley, being in part a subtle or oblique reference to one end of the Gabba cricket ground in Brisbane (I felt a reference to the old Clem Jones stand - or even 'Sir Gordon Chalk'! - might have been pushing it...). 

There's been a tremendous amount of excitement in Brisbane this week as the English cricket team is in town to the play the first Test Match of the historic Ashes series.

The view of the Stanley Street End skyline today takes in many cranes, as well as the imposing $85 million Trafalgar Residences, a 20-storey apartment block at 855 Stanley Street (being a new development since the last time an Ashes test was played here). 

Looking back towards the opposite Vulture Street End of the ground, the television cameras picked up the apartments advertised for sale and for rent at 444 Vulture Street, where apartments are advertised for rent from $360/week for 1-bedroom units, and from $750/week and above for 3-bedders. 

At this stage of the construction cycle there's a risk of vacancy rates being understated as single advertisements can account for multiple new apartments.

And the offers of rent-free periods for tenants, free internet, and so on in Woolloongabba apartments reflect the clear weakness in the rental market. 

In a moment of w...


Australias Housing Market Over 4 Times Size of Economy, US is Under 2 "IndyWatch Feed"

Australias Housing Market Over 4 Times Size of Economy, US is Under 2 by Mike Mish Shedlock The Maven TDC Note Australias housing market is like a double bubble. When it pops it may take the entire economy...

The post Australias Housing Market Over 4 Times Size of Economy, US is Under 2 appeared first on The Daily Coin.


Australia Real Estate Becomes Biggest Bubble In The World! TWICE As Bad As Subprime Crisis! (Video) "IndyWatch Feed"

Australia Real Estate Becomes Biggest Bubble In The World! TWICE As Bad As Subprime Crisis! Video The Money GPS Click here to sign up for The Daily Coin FREE newsletter covering precious metals, war, health and prepper suggestions! Video Source

The post Australia Real Estate Becomes Biggest Bubble In The World! TWICE As Bad As Subprime Crisis! (Video) appeared first on The Daily Coin.


Five questions about democratic power "IndyWatch Feed"

MANY people complained that Malcolm Turnbull was running scared by cancelling next weeks sitting of the Parliament. But that was a political reaction. The more important constitutional question, and its implications for democracy, went unanswered: how is it that a Prime Minister without a majority in the House of Representatives can prevent that House from sitting?

Well, Section 5 of the Constitution says, The Governor-General may appoint such times for holding the sessions of the Parliament as he thinks fit, and may also from time to time . . . dissolve the House of Representatives.

In theory, the Governor-General does what the Prime Minister tells him or her to do. So Turnbull can just tell the Governor-General that the Parliament should not sit, and the Parliament does not sit. He could tell the Governor-General to dissolve the House and call an election.

On only one occasion has a Governor-General acted unilaterally and not sought nor taken the advice of the Prime Minister in 1975, when the Prime Minister was dismissed. On one other occasion in 1983 a Governor-General asked for more information and time before accepting a Prime Ministers advice to call a double dissolution election.

Turnbulls action in cancelling the sitting augurs badly for democracy in a time of falling support for the two major parties and the increasing likelihood of hung parliaments.

It is even more messy in a Parliament haunted by the spectre of the possibility of a critical number of Members not being eligible to sit, thus threatening the Governments majority.

At present the Government would not lose a no-confidence motion because it has enough cross-bench support. But that could change with a couple of by-elections caused by our defective Constitution disqualifying MPs who have been democratically elected.

If that happened, the Governor-General would then have to decide whether to make up his own mind as to whether parliamentary sessions continue or follow convention and accept the Prime Ministers advice, whatever that might be a fresh election, on one hand, or cancelling of parliamentary sittings until the all the by-elections are over, on the other.

Cancelling sittings prevents embarrassing defeats for the Government or the passing of legislation it does not want a bank royal commission, for example.

There is much too much uncertainty in all this. And much too much leeway for short-term polit...


Hunter's gathering pace "IndyWatch Feed"

Recovery momentum

Job vacancies continue to rise solidly, up by another +8.4 per cent over the year to October 2017, according to the Department of Employment.

Vacancies have now increased by +37,000 or +26.5 per cent since the October 2013 nadir. 

In New South Wales vacancies are up by +6.4 per cent over the past year in seasonally adjusted terms to the highest level since March 2011.

The recovery since 2013 has really been a Sydney and Melbourne least, until now.

Regional rebound

It's good to see momentum shifting away from the centre of the city a little, with advertisements now surging back to life in regions such as Newcastle & the Hunter (+26.8 per cent), and Gosford (+21.1 per cent).

Similarly in Victoria there was strong year-on-year growth in vacancies in Geelong (+13.4 per cent) and Bendigo (+13.5 per cent).

Of course, the absolute numbers of vacancies are much lower in regional cities than in the capitals, but the direction is nevertheless heartening. 

There was also double digit growth in Queensland and Victoria, while Western Australia (+16.5 per cent) has clearly turned the corner. 

In trend terms job ads rose in seven of the eight occupational groups over the past year, with...


Debt Rattle November 24 2017 "IndyWatch Feed"

Dorothea Lange Migrant agricultural workers in California 1935   The Party Is Over for Australias $5.6 Trillion Housing Frenzy (BBG) The UKs Future Economic Storm Just Got Worse (CNBC) UK Consumer Confidence Hits Lowest Level Since Aftermath Of Brexit Vote (BBG) After Sudden Rout, China Stock Traders Question Beijing Put

The post Debt Rattle November 24 2017 appeared first on The Automatic Earth.


Weekend reads - must read articles of the week "IndyWatch Feed"

Summarised for you here at Property Update (or click the image below).

Check out some of the other free resources, including the newsletter and podcast!


The Weekend Quiz November 25-26, 2017 "IndyWatch Feed"

Welcome to The Weekend Quiz. The quiz tests whether you have been paying attention or not to the blogs I post. See how you go with the following questions. Your results are only known to you and no records are retained.

1. A fiscal rule that forces governments to run fiscal surpluses each year would equally force the private sector to run deficits and accumulate increasing levels of indebtedness as a result.

2. If a government is running an austerity program and learns that the estimated output gap was smaller than they originally thought, then other things equal, the governments discretionary fiscal austerity would have to be intensified to balance the structural fiscal balance.

3. Opponents of continuous fiscal deficits often agree that a short-period of deficit spending when the private demand is weak is not likely to be inflationary. Their main concern is that it is the accumulated stock of spending associated with continuous fiscal deficits that eventually increases the risk of inflation. Their concern has some validity.



Last-minute economic policy post "IndyWatch Feed"

Both Labor and the LNP have released their economic policies just two days before the state election. This isnt just a matter of costings. Essentially, all the new expenditure items and tax reductions were announced with some fanfare during the campaign, while the revenue measures and expenditure cuts needed to fund these goodies have been kept under wraps until now. This is a terrible way to run an election, but the hardheads on both sides obviously think its a good idea (the same hardheads who gave us compulsory preferential voting on the Labor side and the Commission of Audit for the LNP).

On the LNP side, my assessments here and here have been confirmed. The tax cuts and extra spending promised by the LNP have been financed by cuts to services (euphemistically referred to as efficiency dividends) and by the abandonment of the Cross-River rail project, which appears to be vital if we are going to handle a growing Brisbane population in the future. The efficiency dividend will necessarily involve reduced employment. If the promise to avoid compulsory redundancies is adhered to in spirit as well as letter, that will mean a semi-permanent hiring freeze in areas with low turnover, which is likely to have adverse effects on efficiency.

These are big cuts, but not enough to reach the target of a surplus on fiscal balance. That means the stage is set for yet another Commission of Audit and unannounced further cuts.

Labor is planning to finance promised improvements in services through a mixture of tax increases (targeted at the relatively wealthy) and unspecified reallocation of existing funds, yielding a modest net increase in expenditure as compared to the cuts proposed by the LNP.

We have a choice then between Labor offering improved services, which must ultimately be financed by tax revenue and the LNP offering cuts in taxes, services and jobs. It would have been helpful if this choice had been made explicit four weeks ago, but still it is clear enough. Unsurprisingly, I prefer Labor.

Thursday, 23 November


Zimbabwes new leader returns to cheers "IndyWatch Feed"

A former confidant of ousted leader Robert Mugabe has promised a new, unfolding democracy and reached out to the world, saying help is needed to rebuild Zimbabwes shattered economy.

Emmerson Mnangagwa, who fled Zimbabwe after he was sacked as vice president on November 6, made a triumphant return to the country on Wednesday, a day after 93-year-old Mugabe resigned.

Mugabes departure after 37 years in power followed an intense week with the military staging a government takeover,...


Chinas new 7680mph hypersonic nuclear strike aircraft Dragon "IndyWatch Feed"

Pictures have emerged of the Dragon under development in a propaganda documentary produced by the Communist Party.

Chinese scientists are said to be using a newly constructed wind tunnel to test the Dragon.

US spooks have previously revealed China is developing high-tech nuclear aircraft which they have codenamed the DF-ZF.

It is believed the aircraft as already been tested seven times.

Images shown in the documentary broadcast last month allege to show a mock-up of the spearhead-looking vehicle being tested.

The Dragon is said to be capable of evading any missile defence system employed by the West.

Scientists have designed the aircraft known as a hypersonic glide vehicle to sit atop a missile.

It would replace conventional warheads and would be able to independently fly evading enemy defences.

This summer, the US also tested is own hypers...


Sydney unemployment rate dropping "IndyWatch Feed"

Sydney unemployment falling

Greater Sydney has been creating thousands of new jobs per month in recent times, and the harbour city's unemployment rate has generally been trending down now for the past 44 months, now hitting an annual average of just 4.65 per cent.

Brisbane also recorded a neat fall in the month, but seems to be creating a dearth of full time positions.

Sydney's monthly unemployment rate dropped to just 3.9 per cent in the month of October 2017 itself, a fantastically strong result which suggests any meaningful housing market correction is unlikely for the time being.

There hasn't been a lower monthly unemployment rate since more than a dozen years ago, all the way back in August 2005, and before the financial crisis.

Sydney's labour market is tightening gradually, and there are some nascent signs of wage pressures in the trades and construction industries.

It now takes 14 weeks on average for Sydneysiders to find a job, down from 18 weeks three years earlier, so it's been a bit of a slow burn.

Newcastle and the Hunter Valley have also seen a fine turnaround in fortunes over the past couple of years as the state's economy accelerated away from the resources downturn (and coal prices in particular came shooting back with a vengeance).

Stamp duty and tra...


Fake economics: how to make bad transport projects look good "IndyWatch Feed"

Victoria is spending $5.5 billion building the West Gate Tunnel, another $1 billion widening CityLink, probably $10 billion on the North East Link, $11 billion on Melbourne Metro, $8 billion removing level crossings, and, if the Coalition returns, more than $3 billion on the East West Link.

NSW is spending $16 billion on WestConnex, $14 billion on Western Harbour Tunnel Beaches Link, $9 billion on the F6 Extension, $3 billion on NorthConnex, $11 billion on Sydney Metro South West, $8 billion on Sydney Metro NorthWest, $3 billion on Parramatta Light Rail, $2 billion on Sydney Light Rail, and billions more on Sydney Metro West.

It would be nice to know it was money well spent.

There's a fiction that a benefit-cost ratio above "1" means things are OK.

Here's how it works. A consultant adds up all the costs over a period of 30 or 40 years and all the benefits. If the benefits are greater than the costs, giving a ratio of, say, 1.5, it is said to be worth doing. But if they are less, say, 0.45 (which was the ratio in the first study of in the East West Link), it is said to be a waste of money.

Often the studies are never made public, sometimes they are never conducted (as was the case with the national broadband network) and very often they are conducted as an "add-on"; financial bling to be sprinkled over the project after it has been approved and announced.

Melbourne's $5.5 billion West Gate Tunnel is a case in point. Sydney's $14 billion Western Harbour Tunnel and Beaches Link is another. Internal NSW Transport emails released to me under freedom of information show an analyst complaining that his superiors had as good as completed the business case without access to the numbers.

"How something with no, repeat, no, benefit-cost analysis or traffic numbers can be construed as 80 to 90 per cent complete is beyond me," the exasperated official wrote. "The numbers tell us if the thing makes sense."

And the numbers are sometimes rigged.

A seminar in Melbourne last month on the use and abuse of cost-benefit analysis explored the ways.

One of the easiest is to hike the traffic forecasts. On some toll roads, the number of cars predicted to use them was greater than the capacity of the roads. Out of court settlements were reached between the modellers and investors in Sydney's Lane Cove Tunnel and Brisbane's M7 Clem Jones Tunnel.

Professor Jago Dodson of the RMIT Centre for Urban Research revealed that in the queue at a conference he had met one of Australia's senior transport modellers who had worked on at least one of those tunnels.

"Myself and another col...


The lame progressive obsession with meaningless aggregates "IndyWatch Feed"

Maybe the British Labour Party could get Nancy Pelosi to do some stupid tweets for them as well. She is an expert at it see my blog When neoliberals masquerade as progressives. She thinks it is smart progressive politics to post tweets criticising her political opponents for a policy that explodes the deficit dumping debt on every man, woman & child in America. A fallacious argument. But moreover, a very stupid strategic argument because it fails to educate the public on what deficits and public debt are and what the capacities of a currency-issuing government and locks the progressive side of politics into no-win dilemmas. When it is their turn to govern they quickly find that they have no room to move on government spending because their own taunts when in opposition are thrown back at them. Same the world over. The progressive side of politics seems to have a lame obsession with meaningless aggregates like the size of the fiscal deficit or public debt to GDP ratio. Pathetic is not the word.

In Australia, you still see headlines regularly like this one Our national debt blasts past half a trillion dollars which apart from the emotional language and framing that is meant to create fear immediately (blasts past) it also runs the line that:

Australias national debt has exceeded $500 billion, more than double the debt Labor added during the global crisis but in a fraction of the time, forcing the Coalition to defend its claim to be the better economic manager.

Which suggests that the conservatives (Coalition) are worse policy makers because their fiscal deficit has been higher.

The Labor Party in Australia has been demanding the Government drop its planned corporate tax cuts because they will lead to a debt blowout. Idiots.

The corporate tax cuts are bad policy but not because the deficit will rise as a consequence.

This sort of attack is mindless and doesnt advance progressive politics. In fact, it holds it back.

We know that there is a matching public debt issuance for the on-going deficits. So under those redundant institutional arrangements (more later), it is obvious that if the government is running a deficit then its debt will rise $-for-$.

To merely rehearse the line that if a government with lower public debt is doing a better job than one with higher public debt, which is basically the argument the journalist seeks to make in this case, is an exercise in ignorance or deliberate deception.

It might be true that the policies that are in place which deliver a higher fi...


Financing a UBI/GMI "IndyWatch Feed"

A couple of months ago, I wrote a post making some observations on the closely related ideas of a Universal Basic Income or Guaranteed Minimum Income. The most important was

Observation 1: Any UBI scheme can be replicated by a GBI with the same effective marginal tax rates, and vice versa

I meant to follow up with a more detailed exploration of financing issues, but all sorts of other things intervened. However, Ive now prepared a draft, which is over the fold.

Comments and criticism much appreciated

How could a UBI/GBI be financed along with the other activities government must undertake? Ill assume that that final government expenditure, excluding transfer payments, amounts to 20 per cent of national income, and that revenue from sources other than income tax amounts to 10 per cent of national income. Thats fairly accurate for Australia.

By thinking about the UBI case, its easy to work out the required tax rate. Keeping things simple, Ill assume a single rate of taxation for all income above the threshold of 20 per cent of the average, For a UBI of 40 per cent and a net financing requirement of 10 per cent, the required revenue is 50 per cent of national income. If 20 per cent of income is untaxed, the required tax rate would 62.5 per cent. However, since those in the lowest quintile have incomes below the threshold, the proportion of untaxed income is a little lower and the required tax rate is approximately 61 per cent.

The UBI can be replicated as a GBI with the same effective marginal tax rate (EMTR). In this case, the net revenue requirement is equal to 27.6 per cent of national income, derived as the cost of the GBI (17.6 per cent), plus the net financing requirement for final government expenditure 10 per cent.

The outcomes are shown in Table 2. Column 2 shows tax paid by those in equal quintile and the total revenue expressed as a proportion of national income. The revenue from income tax is 27.6 per cent of national income, which is approximately equal to the financing requirement. Column 3 shows the average rate of taxation for each quintile. Column 4 shows disposable income, taking account of taxes other than income tax, which are assumed to be a combination of fixed charges (equal for all households) and proportiona...


A Land Tax for the Top End? "IndyWatch Feed"

Amid recent GST distribution cuts of $400m p.a. (about 12% of revenue) and a flagging property market, the Northern Territory Government is facing severe fiscal challenges. The NT is the most stamp duty reliant government in the federation, and has been hard hit an inevitable correction in its housing market. Annual dwelling (predominantly land) prices []


The First Two Weeks of Crypterium ICO a Resounding Success "IndyWatch Feed"

The first two weeks of Crypterium ICO, which started on October 31, 2017, saw lively and robust trade, with customers flocking to the sale from all over the world. Fifteen thousand users from 143 countries have taken part in the CRPT token sale to date, helping the project reach its soft cap within the first 5 hours. Crypterium, a revolutionary cryptobank, is gearing up to create an integrated service that utilizes the most advanced blockchain features to bring cryptocurrency payment options to the real world. The funds collected through the ICO will be used to create the service, which will go live in late January.

What makes the early results particularly remarkable is the fact that the CRPT token sale attracted the attention of token-buyers from every corner of the world. Users from Russia, USA, Brazil, United Kingdom, Indonesia, Japan, Malaysia, South Africa, India, Nigeria, Australia, South Africa, and many other countries showed their support of the project by becoming its token holders. Although the highest number of token holders came from Russia and the United States 21.40% and 20.74%, respectively, neither of these two countries demonstrated the highest average token spending so far. The leadership in this category belongs to South Korea: an average user from this country spent nearly $2,037 on CRPT tokens. The Top Ten average purchases also included customers from the Czech Republic, Switzerland, United Kingdom, Japan, Australia, Belgium, Turkey, Malaysia, and Netherlands, whose users spent an average of $600-1200 to acquire their tokens.

But what makes this ICO truly remarkable is the overall relatively low average spending: not counting major institutional buyers, an average token holder spent just a bit over $500 to buy CRPT tokens. All this indicates that the product offered by Cryptonomos found great resonance with the public at large people are very interested in being able to use their funds in cryptocurrencies to pay for their everyday purchases.

We are extremely pleased with the early results, says Vladimir Gorbunov, Crypterium CCO and co-founder. We set out to create a product that could be useful to just about every family, and people responded. I think that both the geography and the average spending weve seen so far show that the wider blockchain community approves of what we are doing.

Crypterium is working to incorporate the decentralized cryptocurrency ecosystem into daily life. This requires, above all, creating a tool that would allow the use of cryptocurrencies to make instant payments for peoples routine everyday purchases paying the bills, dinner in a restaurant, or buying bus tickets. The projects open-source platform will also feature an innovative system to enable the acquisition of cryptocurrencies by businesses (i...

IndyWatch Australian Economic News Feed Archiver

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