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Saturday, 14 July

23:58

Canberra rents "IndyWatch Feed Economics.au"

Too damn high...

Median asking rents for houses in Canberra are now up by more than 30 per cent over the past 3 years.

Source: SQM Research

Unit asking rents in the nation's capital, despite a surge of construction, are up by about 17 per cent over the same period. 

11:20

Weekend reads - must see articles of the week "IndyWatch Feed Economics.au"

Here they are!


Don't forget to subscribe for the free newsletter and commentary here.

11:15

Most of Victoria getting under construction "IndyWatch Feed Economics.au"

Jumpin' jackhammers

Don't normally deal in hyberbole on this blog, but gee whizz this header isn't too far off the truth.

When the latest engineering construction figures were released last month they showed a huge ramp up in work yet to be done in Victoria, as a volley of transport and infrastructure projects underway saw the engineering pipeline explode nearly $10 billion higher, to sit at by far the highest ever figure. 

In a recent report on the end of the construction boom, I also noted that of the capital cities only Melbourne presently has the dynamics to sustain an elevated rate of apartment construction, supported by extraordinary population growth

An unprecedented surge in attached dwelling approvals October and November 2017 had become commencements by the first quarter of 2018, as the number of dwellings under construction continued to rise statewide.

Commercial building work in the pipeline is booming, too, doubling in only the past couple of years to more than $8 billion.

The net result is a wild and synchronised upswing in the total pipeline, with the best part of $38 billion of work yet to be done, also a near-doubling in only the past couple of years. 


Nationally construction activity may be set to fall, but clearly this won't happen any time soon in Victoria.

In fact, looking at this chart Melbourne may even experience the opposite problem, being a constraint on capacity!

Residential construction in particular is known to have a strong multiplier effect, so it's qu...

08:55

Australian Bank Bans Use of Mortgage Funds for Crypto Speculation "IndyWatch Feed Economics.au"

Australian Bank Bans Use of Mortgaged Funds for Crypto Speculation

One of Australias oldest financial institutions, Bank of Queensland, has prohibited the use of home equity loans for virtual currency speculation. The move has been attributed to concerns pertaining to the growing regulatory oversight of the cryptocurrency sector in Australia.

Also Read: Tether Announces Appointment of New Chief Compliance Officer

Bank of Queensland Cracks Down on Customers Using Mortgage Funds to Trade Crypto

Bank of Queensland has banned its customers from using loans that are leveraged against home equity for the purposes of cryptocurrency speculation due to concerns pertaining to the increasing regulatory oversight of cryptocurrency activities in Australia.

Contracts issued by Bank of Queensland will now caution prospective borrowers any loan purpose that involves the acquisition of or usage of cryptocurrency is unacceptable. The Australia...

08:00

The Weekend Quiz July 14-15, 2018 answers and discussion "IndyWatch Feed Economics.au"

Here are the answers with discussion for this Weekends Quiz. The information provided should help you work out why you missed a question or three! If you havent already done the Quiz from yesterday then have a go at it before you read the answers. I hope this helps you develop an understanding of modern monetary theory (MMT) and its application to macroeconomic thinking. Comments as usual welcome, especially if I have made an error.

Question 1:

The value of money inevitably declines if the money supply rises.

The answer is False.

While the statement is mostly false there are situations (rare) where it could be true. But as a blanket statement it is false.

The question requires you to understand: (a) the difference between bank reserves and the money supply; and (b) the Quantity Theory of Money.

The mainstream macroeconomics text book argument that increasing the money supply will cause inflation is based on the Quatity Theory of Money. First, expanding bank reserves will put more base money into the economy but not increase the aggregates that drive the alleged causality in the Quantity Theory of Money that is, the various estimates of the money supply.

Second, even if the money supply is increasing, the economy may still adjust to that via output and income increases up to full capacity. Over time, as investment expands the productive capacity of the economy, aggregate demand growth can support the utilisation of that increased capacity without there being inflation.

In this situation, an increasing money supply (which is really not a very useful aggregate at all) which signals expanding credit will not be inflationary.

So if nominal demand kept increasing beyond the capacity of the real economy to absorb it via increased production then the result will be inflation and the value of the dollar would start to decline.

The Quantity Theory of Money which in symbols is MV = PQ but means that the money stock times the turnover per period (V) is equal to the price level (P) times real output (Q). The mainstream assume that V is fixed (despite empirically it moving all over the place) and Q is always at full employment as a result of market adjustments.

In applying this theory the mainstream deny the existence of unemployment. The more reasonable mainstream economists admit that short-run deviations in the predictions of the Quantity Theory of Money can occur but in the long-run all the frictions causing unemployment will disappear and the theory will apply.

In general, the Monetarists (the most recent group to revive the Quantity Theory of Money)...

03:00

This Robot Could Soon Be Your Boss "IndyWatch Feed Economics.au"

Despite vast changes in automation over several centuries, theres little evidence that technology harms human labour.

The long-feared vision of robots lording over jobless masses has always struck us as unlikely.

After all, there are billions more people today than there were during the Industrial Revolution. And yet, somehow, weve managed to find jobs for most of them.

In truth, automation does displace jobs.

But most jobs taken off the market through automation are replaced by others, sometimes in entirely new industries.

Of course, a handful of people will be caught out by a shortage of skills necessary for these emerging new roles. But thats always been the lay of the land. Society doesnt stand still to make sure everyone keeps up.

So dont hold your breath for a robot invasion. Its not coming anytime soon.

If, and when, a robot does take your job, provided youre not retired already, youll likely be doing a job that doesnt yet exist.

Still, despite our indifference towards the impact of automation, were not comfortable with every aspect of it.

In particular, we admit to feeling a little uneasy by whats happening at computing manufacturer IBM.

And if you think robots are a threat to your job security, youll want to sit down for this one.

Its one thing to fear a robot taking your job. Its another matter altogether to have your performance evaluated by one.

Yet thats exactly what IBM has implemented in its workplace.

IBM uses a technology called Watson Analytics. That name may ring a bell. You may recall Watson famously competing on the US game show Jeopardy! in 2011, beating out two former champions.

Watson Analytics is the continuation of IBMs research into AI.

Best of all, its wasting no time working its way up the corporate ladder.

Meet your new performance evaluation adviser

To see how, imagine youre sat across from your manager at an annual review.

Just a single sheet of paper separates you.

That piece of paper is the sum of everything youve done in the past year. It shows how youve matched up against expectations, and whether youve gained any new skills in that time.

There are no grading scales to circle. Just Watsons data.

Using this data, your manager decides whether youve earned the right to a bonus, pay rise or even promotion.

Of course, Watson does have its limitations. It can only measure performance by using data from IBMs internal training...

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Friday, 13 July

22:59

Weekend Australian: My way "IndyWatch Feed Economics.au"

Profile piece today in the Weekend Australian here (paywall).

20:56

Land sales to slow "IndyWatch Feed Economics.au"

Don't wait to buy land...

The latest lending finance figures hinted at a slowdown in lending to finance blocks of land.


Lending for major renovations declined to the lowest level in 17 years, down by more than a fifth from last year's peak.

The share of lending finance to investors also continued to ease in New South Wales and Victoria.

As for Darwin, where population growth has gone from booming to almost zero...


Total finance commitments declined 1.4 per cent to $67.4 billion.

Everything in moderation, it seems.

16:42

Bank of Queensland Bans Crypto Purchases Using Home Equity Loans "IndyWatch Feed Economics.au"

Australian retail lender Bank of Queensland is updating its borrowers loan contracts to keep them from purchasing cryptocurrency using mortgage funds. Brisbane-based Bank of Queensland, a retail bank listed on Australias primary stock exchange is discouraging its borrowers from using real-estate mortgages to purchase cryptocurrency after deeming it a high-risk investment, according to the Australian

The post Bank of Queensland Bans Crypto Purchases Using Home Equity Loans appeared first on CCN

10:15

Australia Real Estate Bubble Will COLLAPSE (Videos) "IndyWatch Feed Economics.au"

Australia Real Estate Bubble Will COLLAPSE Videos The Money GPS Part 1 Part 2

The post Australia Real Estate Bubble Will COLLAPSE (Videos) appeared first on The Daily Coin.

08:00

The Weekend Quiz July 14-15, 2018 "IndyWatch Feed Economics.au"

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. The value of money inevitably declines if the money supply rises.



2. Economists note that the automatic stabilisers in-built into government fiscal policy increase deficits (or reduce surpluses) in times of slack aggregate demand. This sensitivity of the fiscal outcome to the economic cycle would not be eliminated if the government followed a fiscal rule such that it had to balance its fiscal outcome at all times.



3. One advantage of low inflation is that the central bank can better use balance sheet management techniques to control yields on public debt at certain targetted maturities.


07:35

Brexit and Trump: deregulate to make the rich richer "IndyWatch Feed Economics.au"

Boris Johnson and a female cyclist

The resigning British Foreign Secretary Boris Johnson said that, as mayor of London, he could not save female cyclists lives because the EU would not legislate to lower truck-window heights when every arm of the British Government wanted action, and that this had convinced him to support Brexit.

Bunkum. It has the same credibility as President Donald Trump saying the rising stock market proves that his economic policy is correct. But the two are related. It all comes down to regulation and duping the population.

Johnson and his fellow Brexiteers talk about British sovereignty and throwing off the yoke of the Brussels bureaucracy and its tangle of regulation so that British enterprise and the jobs that go with it can thrive and everyone will be better off. Trump rails against workplace regulation and makes executive orders to overturn environmental regulation so that American business can forge ahead. He, too, points to foreigners under-mining American enterprise and jobs.

The Brexiteers and Trump play upon the disaffection and xenophobia of lower-income people and offer them hope. But it is a false dawn.

Johnson was correct in citing regulation and Brexit in the same breath, but the real agenda of Brexit is not to enable the British Parliament to legislate for the safety of vulnerable people like female cyclists. To the contrary, it is deregulate as much as possible.

If truth be told, Johnson as mayor did push for greater cyclists safety, but it was the EU that put forward the new regulations on cabin windows and Britain in fact unsuccessfully opposed the idea because in the words of a government spokesman in 2014, They will not produce practical changes in cab design and could lead to additional bureaucracy for Britain.

Regulation or more correctly deregulation is the core issue for Brexiteers and Trump.

And the reason is fundamental.

When you look at it, wealth is nearly all generated from the natural environment, workers and consumers. And regulation is mostly directed at ensuring businesses, particularly big businesses, do not over-exploit the environment, workers and consumers, or the public at large.

So, of course, if you remove environmental regulation and allow businesses to pollute the air, ground and water and not pay for its remediation, the share price of those businesses will go up. But it does not...

05:00

Welcome To The Economic Illusion, Here Is The Real Economy (Video) "IndyWatch Feed Economics.au"

Welcome To The Economic Illusion, Here Is The Real Economy Video X22 Report The housing crisis in Australia is being exposed, it is much worse than everyone thinks. The economy is not improving, real wages are now stagnant for...

The post Welcome To The Economic Illusion, Here Is The Real Economy (Video) appeared first on The Daily Coin.

04:32

Longest Total Lunar Eclipse of Century Occurs July 27 "IndyWatch Feed Economics.au"

By Elizabeth Howell

The longest total lunar eclipse of the 21st century is just a month away.

The total phase of the blood moon eclipse of July 27 will last 1 hour and 43 minutes, during which Earths natural satellite will turn a spectacular red or ruddy-brown color. From start to finish, the entire celestial event will last nearly 4 hours.

The eclipse wont be visible to viewers in North America, except via webcasts. But observers in much of Africa, the Middle East, southern Asia and the Indian Ocean region will get an eyeful, given cooperative weather, according to lunar scientist Noah Petro, of NASAs Goddard Space Flight Center in Greenbelt, Maryland.

Julys total lunar eclipse occurs on the same day the planet Mars reaches its opposition, when it will shine at its best in the night sky. This month, Mars will be at its closest to Earth since 2003. After opposition, when Mars will be brightest, it will reach that closest point on July 31. You can learn more about that event in our dedicated guide here: Mars at Opposition 2018: How to See It and What to Expect

Unlike with solar eclipses, you need no special equipment to observe lunar eclipses. These latter events, which occur when the moon passes into Earths shadow, are safe to view directly with the naked eye, telescopes or binoculars.

The moon turns deep red or reddish brown during eclipses, instead of going completely dark. Thats because some of the sunlight going through Earths atmosphere is bent around the edge of our planet and falls onto the moons surface. Earths air also scatters more shorter-wavelength light (in colors such as green or blue); whats left is the longer-wavelength, redder end of the spectrum.

The timing if this total lunar eclipse means it wont be visible from North America, though much of the Eastern Hemisphere of Earth will see part or all of the eclipse. The entire eclipse will be visible from Africa, the Middle East and countries in central Asia. The eclipse will be visible from eastern South America as it is ending, and from Australia as it is beginning.

The time of greatest eclipse will be 4:21 p.m. EDT (2021 GMT) on July 27, according to EarthSky.org. The total eclipse will last from 3:30 p.m. to 5:13 p.m. EDT (1930 to 2113 GMT). There will also be some time before and after when the moon is in the lighter part of Earths shadow, which is call...

03:12

The Art of US Policymaking Trump Style "IndyWatch Feed Economics.au"

Im continually amazed at the legions of politicos, pundits and so-called experts who dont understand President Trump or how he conducts policy.

These elites have a mental model of how a president is supposed to behave and how the policymaking process is supposed to be carried out.

Obviously, Trump does not fit their model.

Instead of trying to grasp the model that Trump does use, they continually berate and disparage Trump for not living up to their expectations.

A more thoughtful group would say, Well, hes different, so why dont we try to understand the differences and analyse the new model?

Instead, they just cling to the old model and trash Trump 24/7.

Really, these people need to get out of Washington, New York and Hollywood more and get away from their screens.

If they knew more everyday Americans, they would come a lot closer to understanding how Trump gets things done. Its not chaos; its just a little different and more down to earth.

The Trump process

This is because of Trumps art of the deal style described in his bestselling book that goes by the same name. George W Bush and Barack Obama were totally process-driven.

You could see events coming a mile away as they wound their way through the West Wing and Capitol Hill deliberative process. All you had to do was understand the process and you could forecast big developments in a relatively straightforward way.

With Trump, there is a process, but it does not adhere to a timeline or existing template. Trump seems to be the only process participant most of the time.

Heres the Trump process:

  1. Identify a big goal (tax cuts, balanced trade, the wall, etc.).
  2. Identify your leverage points versus anyone who stands in your way (elections, tariffs, jobs, etc.).
  3. Announce some extreme threat against your opponent that uses your leverage.
  4. If the opponent backs down, mitigate the threat, declare victory and go home with a win.
  5. If the opponent fires back, double down. If Trump declares tariffs on US$50 billion of goods from China, and China shoots back with tariffs on US$50 billion of goods from the US, Trump doubles down with tariffs on US$100 billion of goods, etc. Trump will keep escalating until he wins.
  6. Eventually, the escalation process can lead to negotiations with at least the perception of a victory for Trump (North Korea) even if the victory is more visual than real.

No one else in Washington thinks this way.

Washington insiders try to avoid c...

02:32

Buffett Trolled Again: Punter Bets Millions Bitcoin Price Will Soar Above Berkshire Stock "IndyWatch Feed Economics.au"

Its no longer fashionable to just promise to eat your appendages if a bitcoin price prediction doesnt come true now the real deal is staking millions in cold, hard cash. Perhaps peeved by Warren Buffetts constant bashing of bitcoin, an unidentified crypto bull in Australia is betting millions of dollars that the bitcoin price

The post Buffett Trolled Again: Punter Bets Millions Bitcoin Price Will Soar Above Berkshire Stock appeared first on CCN

01:28

Australian Bank Bans Use of Home Equity Loans for Crypto Trading "IndyWatch Feed Economics.au"

The Australian Bank of Queensland has barred the use lines of credit from home equity loans in purchasing cryptocurrencies

Thursday, 12 July

20:15

Australia Begins Fining Parents Who Do Not Vaccinate Their Children "IndyWatch Feed Economics.au"

In Brief

The Facts: Australia is fining parents who do not adhere to the suggested vaccination schedule set forth by the government. This is potentially paving the way for other countries to follow suit, despite the fact that there are serious concerns with vaccinations

Reflect On: Why is it taboo to question vaccines? Why are there so many studies and so man scientists and doctors raising alarm bells and outlining so many concerns? Why is there such a cover-up about the reality of unsafe vaccines?

By Arjun Walia

A recent move by Australia is sparking some well-deserved controversy. According to the Australian government:

Parents who dont vaccinate their children against disease will lose part of their fortnightly family support payment starting 1 July. Family Tax Benefit Part A payments will be reduced by about $28 a fortnight for each child who does not meet immunization requirements, under tougher No Jab, No Pay rules. The change to No Jab, No Pay provides a constant reminder for parents to keep their childrens immunization up to date. Immunisation is the safest way to protect children from vaccine-preventable diseases. Parents who dont immunize their children are putting their own kids at risk as well as the children of other people. Since the Turnbull Government introduced No Jab, No Pay in 2016 about 246,000 children and their families have taken action to ensure they meet the immunization requirements. The Turnbull Government provided more than $14 million in last years Budget for free, catch-up vaccinations for children, young adults and newly arrived refugees. It also provided $5.5 million over three years to encourage Australian parents and carers to vaccinate their children. Exemptions apply for children who have medical contraindications or natural immunity and have been assessed by a general practitioner.

Robert F. Kennedy Jr. explains well why this is such a big problem, in this piece.

Were living in an age where parents increasingly report that their typically developing children declined cognitively and physically after receiving vaccines. Despite the sound science supporting these parent claims, government agencies and mainstream media continue issuing the now shopworn mantra that vaccines are safe and effective ignoring published research and even common sense that indicate otherwise.

...

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