November 19, 2012

Boom and bust cycle is the same Down Under

Posted in Sunday Business Post · 107 comments ·
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I am sitting in a small cafe watching an ancient, wizened former Anzac soldier placing a flower in remembrance of his fallen comrades at the cenotaph in Martin Place in central Sydney. The man must be 90 at least, but he is standing erect, two bright medals on his chest. Who is he remembering, or what horrors is he hiding?

The monument full of poppies marks the thousands of Anzac soldiers who died in the two world wars. The Australian casualties in the First World War are truly shocking. Some 38 per cent of all men between the ages of 18 and 44 enlisted. More than 400,000 left for war and 58,000 died. In a dreadful twist of fate, accounts from Turkish snipers in Gallipoli attest to the fact that the Anzacs made easier targets than the average British and Irish soldiers because the milk-fed, rural Anzac soldiers were physically much bigger than the much smaller, less well nourished British soldiers. Twenty-five years later, 39,000 Aussie soldiers died in the Second World War. This man was one of the survivors.

As he stands alone, hundreds of Sydney commuters rush by, consumed by their own cares, as he is by his. The ancient veteran then leans against the monument, lost in his own thoughts. The Australia he fought for was a very different country from today’s Australia. Back then, it was a largely British – and Irish – country. Today, Sydney is a city which hosts – according to its lord mayor, with whom I shared a panel last Tuesday – people who speak 200 different languages. It is clearly an immigrant melting pot, and the initial Italian, Croatian, Serbian and Greek immigrants of the 1950s have been superseded by huge Asian migration in the past 20 years, underscoring yet again that Australia is part of the Asian world now. Over the years, the Irish have kept coming too. Some years, it has been only a trickle, and other years, like now, it is a deluge.

This multicultural Australia is again home to thousands of young Irish people and, last Monday night at a packed convention centre, I spoke to 400 of them. The event was organised by an Irish business network - the Lansdowne Club – which has seen its membership swell in the past three or four years.

One of the most telling parts of the discussion was when the moderator asked how many in the room were paying off mortgages in Ireland. More than 100 hands went up. This is an extraordinary state of affairs. Here we have people who have travelled to the other end of the world to find work and are still lumbered with ridiculous mortgages that they are still servicing. It attests to the fact that the moral hazard argument regarding debt deals is pathetically weak, as this shows people who have already left the country and are still maintaining their payments. Some went so far as to say that they were in Australia in order to be able to meet their payments at home. If anything reveals the craziness of punishing people for making the mistake of succumbing to the incessant financial propaganda spewed out by the
banks from 2000 on, surely it is this.

The conversation moved on to the issue of Australian property. The Aussie property market has been defying gravity for years now. In fact, you could have come to Australia at any stage over the past five years and be reasonably confident that the market was madly overheated, set for a collapse – and yet it hasn’t done so. But every person I spoke to, particularly the Irish ones, seemed to think a monumental crash is only months away.

We know that a property boom is never caused by supply and demand. Property booms and property bubbles are always and everywhere caused by too much credit, and we all know that the ugly handmaiden of credit in good times is called debt in bad times. Credit sounds good, debt doesn’t – but they are one and the same thing and, when a market reverses, credit morphs into debt instantaneously.

So why has Australia avoided a bust so far, particularly when the Aussie banks are so exposed? If you doubt this, consider this fact: at today’s share prices, the Australian banking system is valued at more than the entire banking system of the eurozone. Australia has a population of 22 million, compared to the eurozone’s population of 317 million. You might say ‘go figure’, but the crash hasn’t happened. Why?

Maybe one of the reasons is that the Aussies have that rare luxury of being one of that relatively small number of benighted countries – we also could have been one – to which the financial markets are prepared to lend in its own currency, which is floating. This means that, if the country has a wobble, the exchange rate falls dramatically, which cushions the blow and allows the country to recover without an over-dramatic collapse in local asset prices.

But the mechanism whereby a country with its own exchange rate overheats is not too different from one which does not have its own exchange rate, like Ireland. In Australia, the boom causes the current account to plunge into deficit, because Australian banks are borrowing abroad to lend into the overheating local markets. The locals want Aussie dollars so that the banks have to convert their borrowed US dollars into Aussie dollars, because you can only buy Aussie property with Aussie dollars. This causes the Aussie dollar to rise dramatically against the US dollar – as has been the case in the past few years.

In order to cool down the economy, the central bank raises interest rates, but this just attracts more money in, as the spread between Australian interest rates and US rates widens and the currency appreciates more. Gradually as this goes on, exports become more difficult and imports become cheaper, driving the trade deficit upwards. Also, as happened in Ireland, all this effervescence in the local economy makes investing in the local economy much more attractive than the hassle of competing on the international market. As for productivity, it begins to fall, as more and more cash and immigrants are sucked into the country to be deployed in the booming local economy.

As prices go ever higher, certain investors begin to take profits - and then prices fall. Then leveraged investors, who got into the boom late, panic and try to sell, leading to a flood of properties. This in Australia will be coincident with the currency falling. The fall in the currency will offset some of the falls in property, but not all. This is what is on the cards for Australia. As to when exactly, it’s impossible to tell, but it will happen – for sure mate.

The old Anzac shuffled off after a while, locked into his own world. I turned to last Wednesday’s Sydney Morning Herald. The main paper was 20 pages long. The business and sport supplement was another 20 pages but – wait for it – the property supplement last Wednesday was a whopping 136 pages of wall-to-wall, unashamed, top-shelf, property
porn. Now where have we all seen that before, and what did it signal?

David McWilliams new book, The Good Room, is out now


  1. Paul C

    There is another difference between Ireland & Australia. They are, in the words of my Aussie mates “World Champions at digging stuff out of the ground” – stuff that China has been buying for the past 15 years in vast quantities. It may look like an unsustainable economic model, especially as China wobbles, but it they are doing more than selling houses to each other and thinking that equates to wealth.

  2. bluesky

    Sydney is always a bit of property market special case.. Geography-wise it is hemmed in by protected parklands all round over land and the sea to its east all new developments are v limited and good plots have subdivided to the east for years making a cap on supply.

    Coupled with its diverse local economy leads to the property market being somewhat different than say Dublin or even London.

    The degree to which the general economic factors and geography affect the Sydney property market and the degree to which it may be flying unsustainably on credit perhaps need further exploration.

  3. Lord Jimbo

    Cycles of boom and bust define capitalism; Australia is a lead players in the game today, it would seem that some Irish have learned a painful lesson, while the lunacy of living and working there to pay mortgages back here is quite symbolic of the madness that so many seem cheerleaders for, where are those economists now who championed the whole thing? Where is the media that gave them the platform? Where is the political system that pushed the whole thing? Where are the banks who acted as the great enablers of insanity?

    Sadly for old veterans they joined up for adventure, to escape crippling poverty or because they really believed in the cause, State wars are more often than not started by elites and fought by so called ordinary people. WWI was certainly a slaughter house which consumed all classes, started by Imperial elites in Germany and the Austria-Hungary. The different takes on the war is nicely conveyed in this memorable clip from David Lean’s epic ‘Dr Zhivago’.

    The Revolution -Doctor Zhivago
    http://www.youtube.com/watch?v=k7B-nlmdX0g

    The Anzacs were largely canon fodder with the Gallipoli campaign the best example of the manner in which so many lives were treated with such reckless abandon, little has changed in the intervening period, so maybe the past is not so much a foreign country as a forgotten one.

    The Pogues – The band played waltzing matildahttp://www.youtube.com/watch?v=cZqN1glz4JY

    • bonbon

      Between 1890 until 1917, exactly as Bismarck warned on his forced retirement speech, the model of the Seven Years War was prepared. This was the British Empire at work after its Confederacy was defeated by Lincoln. That is known today as WW1.

      Today we have Mr. Blair’s Doctrine, in full swing now with patriot missiles likely deployed in Turkey. However this time around thermonuclear weapons deployed would shorten the years to mere hours.

      The Blair Doctrine, post Westphalian, aggressive regime overthrow, is in danger of starting something that would make Galipoli look like a pantry game.

    • cooldude

      The idea that the boom bust cycle defines capitalism is a popular one but is it really capitalism that is at the heart of this destructive cycle. The key ingredient for this dreaded cycle is easy liquidity or to put it another way the idea that simply printing more units of currency can produce sustained prosperity. This fallacy has been and still is the core reason behind these cycles. When savings are used as the base for new investment this cycle does not appear. It only happens when you try to “stimulate” new investment with newly printed money. This works for a while but always creates problems and eventually leads to the inevitable bust. We now live in a world where this type of monetary policy is the norm and the answer to every problem is to simply print even more money. So it is not really capitalism that is the core problem but the system of easy central bank money policy combined with the modern system of crony capitalism where the banks and the state are so intertwined it’s impossible to know where one ends and the other begins.

      • bonbon

        Well, actually one can find out “where one ends and the other begins” – see below the EC’s FSB report on Shadow Banking.

        There is another problem, the “credit” by the central banks does not flow into the economy, but into that shadow, exacerbating the collapse.

        • bonbon

          But you may be right – since the global banking system is British, and also “capitalism” one begins and ends with the same problem !

          • Tony Brogan

            And from which part of Britain did the Rothschilds origninate.
            You would be more helpful in understanding by refering the the banking cartel as the “evil empire”, rather than denigrating the old adversary the British Empire.
            It is the banking enpire is the problem and their use of credit based booms and the withdrawal of credit to create the busts.
            Their basic tool is the central banking system designed to control governments and the BIS the central bankers HQ and the use of the IMF to enforce auterity on an impoverished population.

          • bonbon

            It is helpful to tell the truth. The British imperial financial empire, collapsing at a bank near you, is Venetian. The Privy Council (including those that run the Inter Alpha bank Group) is exactly the Doge model from ages ago. The collapse of the Bardi and Perruzi banks in the 1400′s is the forerunner – they actually used derivatives. It is called the Fondi Model – it makes central banks as needed or not. the apparent silence from the Austrian School on these very well documented banking and political activities leads me to think the sought after model is simply that Venetian Fondi model, global of course.

            This is the key to understanding the way to deal with it. Hamilton went against this directly.

          • Tony Brogan

            It would help if you did not refer to 500 year old events without considering the past actions of your Mentor Mr Larouche. When you acknowledge his past exploits you will gain credibility .

            Equating capitalism with the depravations of the central banking system confuses the issues and makes you look ill-informed and spouting mantra from your mentor.

            You never address the prime problem of the central banking system except by proposing a hamilton system of the same ilk as what we need to be rid of.

          • bonbon

            Venetian “tradition” goes back to at least 800AD, continues right up to the present day. It is really the Roman Empire (Venice was the 3rd). We are dealing with empire. Which is why the circular logic above happens, why it is impossible to separate capitalism from empire, until that is recognized. The Privy Council of the current empire which included Australia where exactly the same financial policies turn up, including a housing bubble, must have known that London’s Financial Times chose to call for Franklin Roosevelt’s 1933 Glass Steagall, an essentially American response to the crisis.

            So things are at sixes and sevens!

      • bonbon

        Still the “capitalism” that seems to be defended – what is it? Rosa Luxemburg’s Accumulation of Capital has a lot to say about that. It is actually British imperialism.

        Rosa Luxemburg, The Accumulation of Capital (New York: Monthly Review Press, 1951).
        Herbert Feis, Europe the World’s Banker, 1870-1914 (New Haven, Yale University Press, 1930).

        This is why FDR’s approach is fundamentally American, and directly opposed to imperialism, and crucially relevant right now.

        • Tony Brogan

          “It is actually British imperialism.”

          And that is why Britains economy is a sad sack and current opinion suggest the only way out for Britain to be rid of its debt is to default. So imperialistic is that.

          • bonbon

            The UK has the unholy problem of being the seat of this global imploding empire. It is destroying its banking system and the physical UK economy.

            The EU, UK, US battle on banking : A Brussels 19-Nov EC conference on banking reform centered on a panel featuring Sir John Vickers, the British “ring fencer,” Erkki Liikanen, the Finnish chairman of the EU Banking Commission, and FDIC Vice-Chairman Thomas Hoenig, the American full bank-separation advocate. Hoenig has become a pole of the debate over Glass Steagall and the Brits and their allies evidently wanted to size him up.
            Liikanen continues to baffle all those who might actually want to determine what his bank reform commission has recommended; Sir John danced nimbly around the Glass-Steagall question while finally coming down squarely for keeping “universal banks”; Hoenig forthrightly described FDR’s steps from bank reorganization to separation and protection {only} of commercial and depository banking, and said that repeal of this system had produced governments guaranteeing huge universal banks, and led to disaster.

        • cooldude

          I had a look at your Hamiltonian banking again to see if I had missed something because you are always harping on about how great it is and it is the solution to all our woes (with the mighty GS of course). Well all I find was a privately owned central bank which charged interest on the money it printed for the US government. It was based on the Bank of England and included the Rothschild banking family as one it’s main shareholders just like the BoE. These shareholders were paid regular dividends from the profits of this lucrative exercise. Now tell me this Mr genius Bonbon why on earth should any sovereign nation pay interest to a private bank to print it’s money? Why not just do it itself unless of course the government is under the control of the bankers. That seems to have been the case and Hamilton himself was a Rothschild agent who married into the family and was sent to America with strict instructions to extend their banking cartel across the Atlantic. Come on you can come up with something better than this. This is just another central banking scam to defraud the country and enrich the banking cartel.

          • bonbon

            Hamilton’s First National Bank private? Very odd indeed. Andrew Jackson went to great fraud to abolish this to create what is now Wall Street’s private cartel.

            Hamilton’s Constitutional Credit Clause – for anyone willing to read it, is the charter for the National Bank. It was set up to handle huge war-debt then. Benjamin Franklin was a British Subject also. Arthur Griffith also, Michael Collins too. Hamilton knew exactly what he was dealing with. Reality is just a little bit more surprising than the Austrian School pretends.

          • cooldude

            There is nothing odd about the FACT that Hamilton’s First National Bank was a private institution and if you care to look at the Wikipedia description of this bank the first condition was that the bank had to be private. You really should check up on your facts as you don’t really seem to know what you are on about.
            http://en.wikipedia.org/wiki/First_Bank_of_the_United_States

          • cooldude

            Here is the history of the real owners of the First National Bank of America. Really nice crowd who are totally ruthless
            http://www.lookingglassnews.org/viewcommentary.php?storyid=121

          • bonbon

            Fact is the Hamiltonian Credit Clause of the US Constitution, unique in history, is the key here. The British Central banking model, including the FED set up by Teddy Roosevelt, are diametrically opposed to this. This Clause was used by FDR for the RFC, and now must be used to set up the 4th National Bank of the USA, after the central banks have been thoroughly Glass-Steagall’d.
            This is the real fight in all the issues. All nations must regain full control over their Public Credit systems, “independent” central banks being given their full unsupported independence. Hamilton’s credit system is the antithesis of the monetary system now devouring us. Ths is why I stress the point – the Austrian School is in fact monetaristic no matter what a wiki says. This becomes painfully evident when Reconstruction is discussed.

          • cooldude

            Ok lets go through this clearly. There are two types of banking systems. One issues the money through Treasury interest and debt free. The other uses the system of privately owned central banks who are paid interest on the money they print and which costs them practically nothing. No wonder they are so keen to eliminate any competition in this massively lucrative franchise.Examples of the first type in American history are the original Colonial Scrip system, Abraham Lincoln’s system of interest free Greenbacks, which he used to finance the war, and JFK’s United State Note which was also interest free and issued directly by Treasury. All of these systems were interest and debt free and were for the sole benefit of the people and did not pay interest to the bankers. One of the main reasons behind the revolutionary war was the desire of the colonists to have this power to issue their own currency and not to have to pay interest to the Rothschild controlled BOE. Their new currency the Colonial Scrip was a huge success and when Benjamin Franklin was asked about the booming economy of the young colony he said ‘That is simple. In the colonies we issue our own money. We issue it in proper proportion to the demands of trade and industry.” This worked extremely well but the international bankers didn’t like it one bit and this leads to the second type of banking.

            The second type is the modern system of central banking where all the money is issued as debt and interest has to be paid to the banks. This system is designed for the sole benefit of the bankers and to the detriment of everyone else. The first example in American history is the First National Bank of America which was set up by Alexander Hamilton who was backed by the international bankers and the Rothschilds in particular. This was a private institution which charged interest on the bonds it issued and paid dividends to it’s shareholders like all central banks. This debt based money had the usual effect of depressing the economy and Benjamin Franklin said “Conditions were so reversed that the era of prosperity had ended and a depression set in to such an extent that the streets of the Colonies were filled with the unemployed.” Reminds me a bit of Europe at the moment. When Hamilton’s bank charter ended in 1811 it was not renewed due to the depression it had caused. The international bankers swore revenge and they bankrolled the British to start the war of 1812. Thats how these guys operate and this cartel of bankers have created many wars and are the main suspects in the murders of Lincoln and JFK because they issued money interest free from Treasury and bypassed their corrupt scheme. The issuance of debt based money was finally won by the bankers with the establishment of the privately owned Federal Reserve Bank in 1913. The shareholders of this bank are the major international banks and they have been collecting interest from the American people for the last 99 years for the privelage of issuing their currency which should be issued interest free by their Treasury. During this time the US dollar has lost over 97% of it’s purchasing power and there are now over 47 million Americans collecting food stamps with real unemployment including long term over 20%. Not exactly a huge success but giving the issuance of a country’s money to the bankers never is. I hope this clears things for you Bonbon but somehow I doubt it.

          • bonbon

            Monetary arguments avoid the Reconstruction, the crucial aspect of existence. This is brought most clearly by the Triple Curve which I can link to again. All the logic of various types of banking are exposed by this. Hamilton faced the huge economic problem of reconstruction after the War of Independence, Lincoln with the Civil war, and (which you neglect to refer) FDR after the 1920 crash. JFK correctly sized up the situation with his very famous speeches.

            So the real factor is the financing now of massive reconstruction after the desolation of the various banks. National Credit systems are Hamilton’s unique insight. Physical economic debt does exist – there is no free energy. Commitment to honor that on a national scale breaks the back of the “independent” central banks.

          • bonbon

            How could Benjamin Frankin (1705-1790) comment on the First National Bank (1790-1811) ? Correct on 1812 and the Massachusetts Bay “scrip” earlier. For Today the fight goes on and the financial empire is prepared to push a thermonuclear 1812 using Obama.

            To deliver a crushing blow, put the banks through Glass-Steagall – then they can operate in the “scrip” tradition. That’s what FDR tried to do.

            See : Second Bank of the US and the “hard money” Andrew Jackson who demolished it.

            “The essential function of the Bank was to regulate the public credit issued by private banking institutions through the fiscal duties it performed for the US Treasury, and to establish a sound and stable national currency”. A private entity with public duties.

            Seems the bet model to me for today. Andrew Jackson’s ghost roams though.

          • cooldude

            The Franklin quote is in relation to the Bank of North America founded by Robert Morris in 1782 which was a precursor to the First National Bank. Alexander Hamilton was Morris’s aide in this bank and used it as a template for his interest bearing money system.

            Andrew Jackson did not renew the charter for the Second National Bank in 1836 because he understood that there was no need for governments to pay interest to private bankers for the job of printing money they were well able to print themselves. There is no reason a sovereign state should have to buy bonds off a privately owned central bank. Other than to enrich the bankers of course and that is the crux of my argument and you still seem to miss it. Any government with the balls to do it can simply shut down the central bank which you admit is privately owned and the shareholders are always the same large banks who are creating this mess. This is the big con that the bankers have engineered where nobody really understands how money is created and how they are paid interest for every unit of currency that is created. That is the big con that these guys have been getting away with and if anyone tries a different system, which benefits the people instead of them, they eliminate them by war or murder. That was the real reason Gadafi was taken out and the real reason they are after Syria.

            Here is a quote from Andrew Jackson “If the American people only understood the rank injustice of our money and banking system there would be a revolution before morning.” that is still the case today but the facts on this are kept well hidden.

          • bonbon

            Ah, so is is about Andrew Jackson. Very well. How about Aaron Burr?

          • cooldude

            Excellent shot.

  4. Afernon

    The balance sheets of ANZ, NAB and Westpac (the 3 main Australian banks) make for interesting reading:
    1. The balance sheets of the 3 banks amount to over $1.6 trillion or nearly $80,000 per capita.
    2. The market cap per employee of the banks is approx. $2 million.
    3. Loan impairments are 0.2-0.25% versus averages in the rest of the world of 0.8-2%.
    4. Profits per customer are $500-600 p.a. compared to international averages of $50-150.
    5. Assets are funded (for Westpac and ANZ in particular) with a large portion (approx 33%) of non deposit based borrowing.
    6. Market cap/book value are 1.5-2 times versus 0.8-1 times in the US and less in Europe.

    It all looks very, pre-2008, Irish to me!

    • bonbon

      I posted graphics of most of that just below. Look at the derivative obligations of the top 4 !

      It is exactly the same banking system as the transatlantic, and why is it that some say it is “different”? It is the Commonwealth, and Ireland is bailing out its Inter-Alpha Group of banks.

      Why is it some say there is no British Empire?

  5. Dorothy Jones

    Irish people are paying their mortgages working in Australia; Lloyds [Royal Bank of Scotland] accepts 10c in the Euro on Irish proprty loan:

    http://www.rte.ie/news/2012/1119/lloyds-takes-massive-loss-on-irish-property-loans-business.html

    • StephenKenny

      Well, the UK taxpayer takes a 90% loss on Irish property loans, via Lloyds. Lloyds are no doubt happily paying out bonuses for exceptional performance.

  6. Adam Byrne

    subscribe.

  7. molly

    Stupid is as stupid does,is Australia to big to fail,I hope that the bubble does not burst down under for the Irish who have gone to Australia for what ever reason.
    Australia has helped the Irish government hide the true dole figures and also put less of a burden on the social well fair system and at least the Irish away from home who are still paying the con job mortgages they took out in this banana republic.
    Where else would the real villains in the Ireland of backwardness and there list of wrong doing fed by greed and corruption has destroyed the lives of so many Irish citizens past present and future.
    What I want to know is where is the hope,where’s the justice,where’s the peace ,where’s the closure.
    Instead we reward the wrong people,is it any wonder where we are as a result.

  8. bonbon

    Some graphs are in order, prepared by Australians who have thoroughly checked the banks :

    Australia’s Gross Foreign Debt to Sept. 2011

    Derivatives versus Assets and Equity. Top four Australian Banks 2010-2011

    Australian Banks’ Total Derivatives.

    Australia’s banks’ combined exposure to toxic derivatives obligations has climbed to $20 trillion.

    CBA Balance Sheet
    The collapse of the property bubble will force a sharply downward revaluation of CBA’s lending assets, of as much as $150 billion, or even more (dotted line). Take that away from its balance sheet, and it is bankrupt.

    Australian Banks Deposits v. Derivatives. top 4 (2009)
    Protect the deposits from the derivatives: The trillions in derivatives puts bank deposits at risk, but without Glass-Steagall the government is forced to support both.

    All images can be best seen with full background at :

    Background to the Financial Crash

    When the transatlantic dooms itself a global catastrophe is in the making. Even China and Russia will not be able to offset it. This is why the US must radically change its economics and how the 2 candidates can be seen for what they are.

  9. bonbon

    Some graphs are in order, prepared by Australians who have thoroughly checked the banks :

    Australia’s Gross Foreign Debt to Sept. 2011

  10. bonbon

    CBA Balance Sheet
    The collapse of the property bubble will force a sharply downward revaluation of CBA’s lending assets, of as much as $150 billion, or even more (dotted line). Take that away from its balance sheet, and it is bankrupt.

  11. bonbon

    Australian Banks Deposits v. Derivatives. top 4 (2009)
    Protect the deposits from the derivatives: The trillions in derivatives puts bank deposits at risk, but without Glass-Steagall the government is forced to support both.

  12. bonbon

    Australian Banks’ Total Derivatives. Jun 1989 – Jun 2012
    Australia’s banks’ combined exposure to toxic derivatives obligations has climbed to $20 trillion.

    This is very similar to the EU and US banking development.

  13. Adam Byrne

    136 pages of property porn, haha. Outrageous.

  14. CastlebarDefender

    Really interested in this as I lived the oz dream and then came home, I am one of the lucky ones where my IT career is flying at the moment. But the negativity and weather does take a toll.
    The questions I have is sure the property market in Oz is crazy, but the previous article say that all will be good in the lucky country as it is the food basket of Asia, so which is it then boom or bust or somewhere in-between?

    • Hi Castlebar,

      Yes this is theweird thing about Oz. There is so much positive int he country, resources/institutions/good government etc that the place must be amongst the best countries in the world to live in, but the bubble in housing is there and if it bursts, things could get messy short-term. As I said in the article, having their own currency helps hugely to cushion the blow, but it still looks very fragile right now.

      Best

      David

      • CastlebarDefender

        Its funny I was over last xmas at a dinner party in the eastern suburbs, the conversation was a mirror image of what Ireland used to be like, property property and more property. One point to note is that they do have affordable housing out west, so when it comes to property there is in my opinion a bit of snobbery where one lives.
        Also the price of the basic’s is outrageous, when one is paying 6 dollars for a not so special coffee and 12 bucks for a take away bacon roll something is wrong some where. One would need a readily available loan to go on the lash for the night !
        Australia has been good to us Irish, I don’t think it could go like our beautiful country as basically corruption on the same scale does not exist in Australia. I do agree a major readjustment has got to happen, like unskilled people are earning 80 K. Value for money does not exist in Oz at the moment

        • bonbon

          It is going exactly the same way. The amateur “corruption” ditty obviously does not explain why.

          it’s the banks!!!

          I have posted fast graphics links here for all to see – face it DMcW is right. It is not a “boom-bust” cycle though as one can see by the graphics.

          The exponential skyrocketing curves on these graphics mirrors the 136 pages of property porn. Banking porn is much more lurid!

  15. molly

    The leader of the Labour Party’s wife is to be given a job Taylor made for her on a salary of €90000 per year the same shit different day ,is this what we voted for.

  16. Beaver

    On the note about ´´great at digging stuff´´, I noted three or four months ago that aussie mineral quarries are having difficulty recently getting paid by the chinese for the materials they order. Another crack in the hull… When all our Irish paddies return once it goes belly up in Oz, the real depression will start here. I wonder what the value to the Irish economy of all these mortgage slaves sending mortgage payments back from Oz, USA, England and Canada is?

    • Colin

      Very good question. David, have you got any data on this? And is your advice to tell these Irish debt junkies to wake up, smell the coffee and default? Or maybe they dream of returning to their 3 bed semi in wet Suburbia with some cash in the bank? What other explanation can there be?

  17. bonbon

    SHADOW BANKING: WHAT WALL STREET AND THE CITY ARE DOING WITH THE MONEY-PRINTING

    Nov. 19, 2012 (LPAC) — Financial press all reported today that the European Commission’s Financial Services Board has calculated the global “shadow banking sector” to have ballooned back up to $67 trillion in assets as of Dec. 31, 2011, a bigger speculative asset bubble than in mid-2007 just before the world financial blowout. The Nov. 18 report, while admittedly just an estimate of unregulated debt, gives an indication what the trans-Atlantic financial institutions have been doing with the tens of trillions in bailout money-printing by central banks – they have clearly not been lending any of it into the real economy.
    “Shadow banking sector” is a general term referring, as the fellow who invented it said, to “the whole alphabet soup of levered-up non-bank investment conduits, vehicles and structures,” such hedge funds, private equity funds, mutual and money-market funds, and the banks’ special investment vehicles that many blamed for the financial crisis. It first became clear what this shadow sector could do to regulated banking 25-30 years ago, when the U.S. savings-and-loan banking sector was wiped out after money-market and other mutual funds seized the savings banks’ mortgage lending market with an earlier real estate bubble, that then collapsed by 1989 and triggered a deep recession. But in the 1990s, with Alan Greenspan’s gradual destruction of Glass-Steagall, the commercial banks themselves were tempted to lend their deposit bases to feed “shadow banking” operations, until the “shadow sector” was larger than the banking sector itself just before the crash began in 2007.
    Now it has ballooned back larger than banking again.
    The shadow banking system in the United States was back to $23 trillion in assets at end-2011, FSB reports, the euro area at $22 trillion, the U.K. alone at $9 trillion. These are estimates of dark activities, not “data”.
    FSB does not recommend doing much about this, though, because, “the sector can also be a source of credit for business and consumers” — so Greenspan’s nonsense justifications of speculation of a decade ago, have also returned.

  18. John Q. Public

    Have the Aussie banks borrowed to the same extent as the Irish banks did? I doubt it. They have their own central bank don’t forget and can deal with disasters in a much more speedy and efficient manner than us Irish. They are not shackled to a union.

    • bonbon

      I’m afraid you need to look at the posted graphics just above to see the real horror show of the 4 top Australian banks. It is exactly the same process underway in the transatlantic.

      CBA Balance Sheet

      The other 5 graphics are even more shocking, at least to those still in a Tiger fugue. There were never Australian Tigers but the signs of exactly the Celtic Tiger are plain for all to see.

  19. Philip

    I am out on a limb here. But the primary reason Australia will not blow badly is because it has a strong innovation and tech base which is not overly reliant on writing software for games or media or banks. Australia’s inventiveness is not that well known because like all good tech, it is not attractive, hype oriented or that easy to explain.

    I’ll give one classic example – Biocycle Septic tank. That came direct from Australia and we have them here in Ireland for about 20 years. Now if the thing could only do the same with Irish banking debt you might say.

    So,the banks or the property that’ll probably go wallop anyway – but who cares? And we should stop believing that banks or currency policy has anything to do with out longterm health. I think Australia will carry on very well no matter what. It’s the faith it has in one’s people and their closeness to Asia with a marked distrust of commonwealth and the history of Ned Kelly and that can do attitude they retain that the USA have lost. We here in Europe and the US need to learn not to be outsourcing risk to the suits. See a recent Constantin Gurdgiev article: http://trueeconomics.blogspot.fr/2012/11/18112012-innovation-professionalization.html

    • bonbon

      “Innovation” especially in sewerage “tech” will not save anyone from the banking chaos. The entire “innovation” foam is coming from exactly those who pumped up the housing bubble!

      Australia will thrive firstly by dumping the British imperial banking system – after all they are a Crown possession! Thinking on a grand scale – it is a continent :

      Here is a full map of Australia with water problems :

      Australian water problems

      And here is how to deal with these (a beautiful map) :

      New Australian Great Water Projects

      These are high quality maps with insets for the entire continent. I highly recommend them even if they are a bit large.

      • Philip

        Easy draw pretty pictures. Another thing to make real.

        • bonbon

          Who ever said it would be easy. Taking the easy way and bailing out banks is what is actually going on and look at the septic tank they have made!

          All of the projects on that map are within feasibility right now. Scrapping the dying financial system is the only blockage in the pipe.

  20. Tony Brogan

    I have tried to post several times to no effect. Anyone else having a problem

    • bonbon

      There is an automatic filter running, but not “censorship”. I do not think it triggers on “gold” but it certainly does on “sensitive” issues, as well as certain character sequences that may be deemed inappropriate. And I think it has bugs – but what software does not?

      So the best thing to do is short posts. People do not read long ones anyway. My 2 bytes.

    • whatamess

      “the REAL deficit or the net present value of obligations” ..if it’s US$7 trillion this year,it will be 9 trill next year…in a total U.S. economy of US$16trill

      This Eric Sprott’s guy of Sprott Asset Management & that Kyle Bass of Hayman Capital really do have their finger on the pulse …no messin’ around with these chiefs

  21. Philip

    @Tony, change your post – try not to repost the same thing over and over again. Could be a bug on the site.

  22. Colin

    I visited Australia 2 years ago, and I wasn’t overly impressed with it. Everything costs a lot of money, you can’t help feeling you are being ripped off. Her cities lack soul, her suburbs are sprawling and ugly and her countryside lacks variety. It feels cut off from the rest of the world, like it has been cast adrift.

    I was blessed I didn’t stay there working, for I personally greatly prefer London and Europe. I would go to the good old USA any day before Oz also. Canada wouldn’t fare so well either, apart from Tony Brogan’s neck of the woods in Victoria.

    Good luck to everyone who goes there and lives the dream. But No Thanks, not for me, not even if you trebled my salary and made it tax free.

    Don’t feel obliged to follow the herd and feel you must love it.

    • Philip

      Depends on what you want. Nothing compares to the depth of Europe, the intensity and grit of London and the service in the US of A. But I always feel Australia has a young and toughy aspect which you either love or hate. Still think it is a bit like another planet and easily underestimated because it can be a bit tacky. We shall see.

    • DB4545

      It’s nice to go overseas to get a fresh perspective.We have a budget coming up fast and maybe we have lessons to learn from Australia. A few ideas local and Australian to help our cash strapped Citizens. The Aussies built their Commonwealth from a penal colony into a decent society for all(I am aware of the Aborigine issues, shocking and a different day’s argument)

      1. An Australia idea, a fair go. Loans for a third level education. I paid for my third level education(The Open University). If you want a third level education pay for it yourself. I have no objection to the children of farmers or the self employed having a third level education. I object to having me and thousands like me having to pay for it.Means tested grants allow those with means to hide their means and educate their children for free at taxpayers expense. If you want an education great pay for it yourself. Take out a student loan and pick your University. It may help some people focus on realistic courses and so avoid media studies or sports psychology in obscure country towns. Not much use if after graduation you’re driving a dumper truck in the pilbara.

      2.An Australian idea, a fair go. A single rate of tax on diesel. Tax credits for farmers, fishermen and agricultural contractors for diesel used based on usage over previous five years. Honest haulage companies have a level playing field. No sludge dumps for taxpayers to clean up. No revenue resources wasted on detection. We all win.

      3. An Australian idea, a fair go. A pension levy. On public sector pensions.If you have a public sector pension up to 35000 a year normal tax rules apply. Over this figure public sector pensions attract an emergency tax/levy of 99.5%. On all pensions. If you have multiple pensions? Too bad. If you have such pensions you were in charge when the economy went tits up. So you pay the price. Deal with it. Everyone else has to. The Dail legislated for the banking crisis overnight. This is’nt difficult. If Bertie and Brian have a problem with it too f..king bad.

      4. An Australian idea. A fair go.Anglo pensions and bank pensions? They are public sector pensions. See item 3.

      5. An Australian idea. A fair go. We elected a fresh Government to sort out the mess. If Enda and Michael and Co. reckon we have to obey the Troika that’s fair enough. Let’s pay the Troika Dail salaries. But why do we have to pay for 166 TDs and senators who concede they no longer have sovereign power as well? They are truly redundant.

      6. An Australian idea. A fair go. The Jewish people were the subject of a holocaust. In Ireland the people that we elected to save our country and become our Golda Meir’s and Menachem Begin’s and Moshe Dayan’s have turned into very well paid Auchwitz Prison Wardens to financially rape our Citizens and scatter our people to the four corners of the Earth.

      It’s time for change. We’re running towards a holocaust in the same way that those tragic Jewish people ran to trenches to be shot by Nazi’s. We’re decent people. We work hard. But we don’t think hard. Except once a century. 1798. 1916. ????.An Australian idea. A fair go. Peaceful change. For all our Citizens.A fair go. Not just for a golden circle. For you, me, my children, your children, our grandchildren. Australia was a Gulag in the 18th Century. We have lessons to learn. A Fair go.For all.

  23. Video: ‘Speak English or die’ – Australian mob’s racist abuse of bus passenger caught on camera

    http://www.independent.ie/world-news/asia-pacific/video-speak-english-or-die-australian-mobs-racist-abuse-of-bus-passenger-caught-on-camera-3301193.html

    Everywhere is the same now Davido. Full of morons. Take off your shades and have a look at life. Aus?

    You can keep it mate. G’day

    • Dilly

      My mate got abused by two Pakistani lads going to work in London 07:30 one morning recently. The buses are 24hours, so these lads were out partying and probably coked up. They called him an Irish C… and attacked him. Now this friend of mine is a Welder, from the West of Ireland and has worked all over Europe on the buildings so hes no wimp. He battered the two of them off the bus. But this sort of thing can happen anywhere now. On a funny note, he said the look of fear on the second guys face when he put the first guy down was priceless.

      • Adam Byrne

        Whole societies are going to hell. Welcome to the 21st century, and it’s only going to get worse. Ignorant scumbags are present in every nation, ethnic group, creed, etc. but the fact that money flows upwards to the corrupt, sadistic and pampered elites merely aggravates the situation because the provision of OPPORTUNITY to healthcare, education, employment etc. completely declines and people take a darker path in reaction.

      • Colin

        Can I buy your mate a pint? What job is he working on now?

    • imithe

      In fairness there’s general disgust about this in Australia too. No a fair reflection of an average bus ride here.

  24. IanW

    It is good to see more Irish people coming to Australia whether as visitors or to stay. This commentary is like many first impressions. Yet Australia is a complex place and first impressions can be deceptive. You need time to understand the country in a more nuanced way. There are risks in the Australian property market, of course, but it is not comparable to Ireland. Metaphorically speaking, there is a significant difference between a bubble and a balloon. Inflated Australian property prices, which occur periodically, adjust more like a deflating balloon: can lead to difficulties but these have been manageable. Fortunately, because of Australia’s banking crisis in the 1990s, we have better bank supervision and an effective central bank. Other factors include controls on land supply and the low level of construction in an expanding population (contrasts notably with Europe). More significant risks for Australia would be caused by a recession increasing unemployment but this, if it happens in the next few years, hopefully can be managed within bounds. I very much doubt that housing prices will be a trigger: more a lagging indicator of problems.

    Europe’s dismal future is not good for Australia because it depresses the world economy. Sadly, what we are seeing is a gradual breakup of the EU and some countries will leave the euroszone in the next few years. That 90 year old digger mentioned in the commentary was remembering a time when elites tried to resolve Europe’s problems by machine gunning their youth. Today, they are doing it by making youth unemployed. Less drastic but still very misguided. What is not mentioned above is that Australia is a federation with the institutions that make a single currency work. So we know intuitively what Europe would have to do to make the euro survive. And it hasn’t even begun to approach such a task seriously. Hence the breakup is inevitable.

    But focusing on the digger in the commentary can tell you something else. Australia is fortunately a “lucky country”. Australian troops suffered greatly in WW1. But they were led by the greatest general in WW1 and the only one who understood how its battles should be fought. Dip into the latest biography of Monash and read about the battle of Amiens on 8 August 1918 which settled the outcome of WW1. The professionalism and innovation are impressive even today. Those ingredients are very much present in the Australian scene today although hard to see, particularly in a short visit.

  25. Davie

    Genuine help needed as I am confused.

    I am saving to buy my first house in Australia (looking to buy early next year) and extremely confused.

    There are a lot of similarities between here and pre-2008 Ireland. However there is great optimism in the country (which there was in Ireland also).

    Are we being overly cautious due to what has happened us?

    Should I hold onto my 100k (for my deposit – which could buy a town back home) and wait for the market to crash?

    Please advise.

    • mediator

      Hi Davie,

      I’m not familiar with specifics of Australian property market but ask yourself (estimate) the following

      Whats ratio of price of house to the average income in Australia
      What would your mortgage repayments be as a % of your take home income.
      Is your wife/girlfriend working?
      Could you afford the proposed mortgage on one income if you had to
      Is the property in an area where there has been historically high demand / strong rental market (ie beside a university)
      Is the house in Perth? ie a boom region that could easily become a ghost town if the mining industry grinds to a halt
      If you buy a house and the market collapses will you be happy to stay where you bought?
      What if children come along – you don’t want to be stuck in a one bed apartment in that situation

      Whats the worst that can happen if you wait and see for another 12 – 18 months

      What does your gut tell you?

      Be careful of your fellow citizens who have bought high priced properties – they will be seeking converts to their way of thinking.

      Best of luck with your decision.

      God bless

      M

    • whatamess

      yes hold onto your 100k and rent for up to 3 years …

      • joe sod

        better still convert your 100k out of aussie dollars into US dollars, any signs of stress in aussie economy and the aussie dollar will be heavily shorted

    • Dilly

      House prices in OZ are crazy at the moment. Only last week my mate was telling me that some young Chinese whiz kid paid 2 million for a house near him.

    • imithe

      Not advising you to buy but, other things to consider –

      Do your research on comparable prices in the area.
      You’ll probably get a mortgage rate of 5-6%, be prepared for it to increase to 7/8/9/10%
      What would you pay in Rent V Mortgage Repayments.

      People often talk about property being expensive in Aus, but renting is arguably more so.

  26. bonbon

    Meanwhile back at the Ranch of the Crooked Euro, some sane advice :

    Hans-Werner Sinn: ‘Temporary Eurozone Exit Would Stabilize Greece’

    Nov. 20, 2012 (EIRNS)–In an interview with Germany’s {Der Spiegel}, Munich-based economist and critic of the Eurozone bailouts Hans-Werner Sinn said the following:
    “If Greece exited the monetary union, the Greeks would purchase their own goods again, and wealthy Greeks would return to invest. And if Portugal leaves, it will have similar positive experiences. The [Sinn's] Ifo Institute has studied some 70 currency devaluations and found that recovery begins after one to two years.
    “We are, of course, also suggesting just a temporary exit. Greece and Portugal have to become 30 40% less expensive, in order to be competitive again. This is being attempted through excessive austerity measures within the Eurozone, but it won’t work. It will drive these countries to the brink of civil war before it succeeds. Temporary exits would very quickly stabilize these countries, create new jobs and free the population from the yoke of the euro.”

    • StephenKenny

      It would only stabilise things temporarily – the reasons that the imbalances have built up hasn’t gone away.

      • bonbon

        Looks like this is being considered. Temporary can be a long time – after 12 years with a currency to last forever? I am tempted to think the criminal destruction of a nearby nation is too much for even the most ideological.

        As for the “reason for the imbalances” , lets put that away with Glass-Steagall. That is also being discussed more and more. Prof. Sinn has done a complete 180deg turn, almost like Sandy Weill of CitiGroup.

        Then the huge economic reconstruction needed can take off. It is really amazing how this epoch will look (assuming the British-Saudi’s are allowed to smash everything). From the New Deal perspective the Hoover austerity was idiotic.

      • Philip

        I am believe that the prime reason for imbalances is not driven by the banks (which are a factor), but by the way we have sleep walked into a low risk world. Better to die slowly than risk a quick death on a big gamble. In the end, the only certainty is one’s demise.

        • bonbon

          Defending the banks to the grave, brave soul.

          Benjamin Franklin is often quoted : “The only guarantee is death and taxes” – all the rest is luxury, life.

          The banks would like to cull us to 1 billion to save their system. Sounds like you agree!

          • Philip

            Actually, I never defend banks. I think their impact is overestimated. You are in awe of them because you are incapable of understanding them. I always regarded them as useless and as such are generally harmless. All people have to do is walk away. But they wont. Too afraid. Therein lies their power. It is that simple. All you are describing are derivations of that fact.

            As for culling. Well, as I said before, no one cares. One guy put it to me very well. Let’s say someone in Apple was working on a new cooling technology and it so happened it would be a major factor in a medical breakthrough, the guys on top would bury it. Why? Cos all they care about is shareholder value, not progress. There’ll be no WWIII or nukem dukem…no value in it, no percentage in it.

            And shareholder value and risk management is what pumps pensions and the wallets of the elite and the contented society. We are a bean-counter driven world and it is getting greyer by the day. It is actually very very simple – kind of like yourself.

          • bonbon

            “I think their impact is overestimated.”. That is exactly what Blankfein et. al need stringers to say. It helps their further looting.

            In fact this is exactly why the Dail and Congress seem utterly incapable of dealing with the banks by Glass-Steagall.

            In a battle like this is the enemy that one refuses to see that obliterates you. It is much easier in the to pick on shadows. In fact you have given a profile of the Tiger.

          • Philip

            Say the banks got fixed today. All working fine etc etc. Lending etc and so on and on. And let’s say you even cleared the debts. Nothing would change because the bean counter mentality will persist. The whole lot would collapse again. All risk aversion drives is a convergence to zero growth.

            Booms (tiger booms) are merely opportunistic slack takers – where risk aversion in one part of the world gave temporary opportunity to another where risk was relatively much lower. Ultimately – risk aversion pulls it all back down.

            We have to make systematic changes to the way we look at progress. This is a full culture change. Such changes tend unfortunately to be crisis driven.

            The harm is on using banks to drive progress and having a taxation and reward system that penalises progress and hard work relative to risk.

  27. Philip

    Suppose it is back to basics.

    Why are property prices so high. Demand created by the availability of loads of money at cheap rates.

    Why are people so optimistic. Human nature. All is up and up and up and it’s infectious.

    Will it crash? Yes. Because China as a main buyer is diminishing as is India and so on so on.

    Will the crash be as bad as what we have in Ireland / Spain…It depends. Depends on who is calling the shots. Will the market be allowed to work? Will media ever be allowed to give a true assessment of what is going on? Will bankers hold the same influence as here in Ireland etc etc

    After some of the stuff I am slowly absorbing over that last few years 3 facts present themselves

    1) Banks are seen by Governments as the only source of wealth creation stimulus. Nations live and die by virtue of monetary stimulus.
    2) We have no leaders who are capable of thinking beyond themselves – certainly in Ireland, politics is a career and one which is handed down through generations. This is really the definition of an elite who expect entitlement and will do anything to retain same. I think it does not differ much elsewhere.
    3) People do not seem to realise that technological progress has actually slowed. We prefer incrementalism to radical, we loathe failure and we expect zero up front costs. Why spend 1 Million on a new type of process when you can have a nice shiny yacht.

    Combine these elements (and I am sure there are others) and it looks like the end of the world cos no one cared. Ask any accountant – better to extract max value from any capital investment than needlessly renew. We are all accountants stuck in our facebooks and email.

    Australia being different? If it just broke one of those 3 facts above, I’d be very hopeful.

    • Dorothy Jones

      Well Philip; you understand systems.

      Pages of the Racing Post reflect the Financial Times markets’ pages. Weather patterns reflect market behaviour.

      But…sometimes…there’s very little behind it all:http://www.youtube.com/watch?v=c31F0x7xRWw

      …Meistens ist garnichts dahinter

      meistens ist garnichts dabei

      lauter Schaum
      lauter Luft
      und der Luftballon verpufft

      und der Strauß legt nur ein Spatzenei.
      Meistens ist garnichts dahinter

      alles nur Schwindel und Schein

      Doch man merkts und ist still
      weil man’s gar nicht wissen will

      denn man fällt ganz gerne drauf rein….

      • bonbon

        That certainly reflects many elected politicians, or appointed ministers (Abgeordneten). One wonders with the threat of war, financial collapse, austerity, how these will “perform on stage”. With feathers?

        Decadence anyone?

  28. bonbon

    A hilarious piece from the Irish Times !

    Could rejoining the UK be any worse than this?

    “It’s not such a radical idea. A one-time columnist for The Irish Times (now pontificating in another place) used to regularly make the case for re-entering the Commonwealth. If that organisation is good enough for former colonies such as India, Australia and Papua New Guinea then it’s good enough for us. After all, the Australians can’t stand the English, but they stubbornly refuse to disengage from a coalition comprising the nation’s former slave states.
    …..
    “It’s all academic anyway. After the events of the last week, it seems unlikely that the British would want us back. Come to think of it, the Vandals or the Huns might have thought twice before inviting the current State into their pillaging hordes.”

  29. molly

    When I look at the government it’s like looking at the mafia without the bullets,but then the people at the top normally got there foot solders to do there dirty work.
    You know it makes me stand back and realise how selfish these people are in some ways it’s almost like looking at spoiled children who have to get three own way.

    • Dorothy Jones

      molly; polite way of saying they hvae no balls. You’re right; not a drop of testosterone.

      • molly

        Where’s the change we where promised ,where’s the new way of doing things.
        Where’s the fairness .
        The tunnel has no light at the end of it and the big question is where will the December budget leave us .
        I hope in my heart of hearts that we go to war with this government.
        I deal with the public in my work and I ask every house holder the same question ,what do you think of the present government ,what surprised me is in the last four weeks the response has turned to a lot of people saying they are seriously think of giving there support back to the shower who ruined this country in the first place .
        Cock roaches and rats comes to mind.

  30. Dorothy Jones

    Like a cesspool which cannot be contained indefinitely, FAZ leaks more of the truth to the misinformed German taxpayer. Game’s up:

    21.11.2012 · Das Geld für Griechenland ist nur geliehen – so heißt es. Unsinn. Es ist Zeit, die Wahrheit zu sagen. Ein Kommentar.
    Von Patrick Bernau

    http://www.faz.net/aktuell/wirtschaft/europas-schuldenkrise/griechenland/kommentar-zur-griechenland-rettung-seid-endlich-ehrlich-das-geld-ist-weg-11967098.html

  31. bonbon

    Bundesbank president Jens Weidmann said 19-Nov in Frankfurt that he did not believe that the proposed banking regulator for Europe’s 6,000 banks should be allowed to help banks which have already been bailed out by national governments.

    “The current problems in the banking system are above all a result of past mistakes on the national level,” Weidmann said.

    “Balance-sheet risks that occurred under national responsibility must also be overcome by the respective member state.” Mr Weidmann, who sits on the governing council of the ECB, echoed the views of Chancellor Angela Merkel and Finance Minister Wolfgang Schaueble who have also made it clear that they do not believe the new regulator should be able to use the ESM to pay for bailouts which have already occurred.

    Merkel’s views angered the Irish Government which later published a statement on behalf of both countries saying that Ireland was a unique case. Mr Weidmann opposes the ECB’s recent bond-buying stimulus package. Europe’s most powerful national central banker added yesterday that the introduction of a regulator for European banks “cannot solve the current crisis”.

    In an apparent reference to Ireland and Spain, he added that some countries’ expectations they could wipe out losses “threaten to delay the reform process in the banking system”.

    What does Weidmann really mean by a reform process in the banking system

    This is the FF/FG/LP policy exposed for all to see as a sham, and austerity for nothing.

  32. bonbon

    After and during the Housing mania came the Renewable Energy insanity. Imagine what this means for Merkel’s “nuclear exit!”! This is a sign to all, Australia included, that the green policy is from exactly the same source as the financial catastrophe.

    An ambitious plan to provide 15% of Europe’s power needs from solar plants in North Africa has run into trouble. The Desertec initiative hoped to deliver electricity from a network of renewable energy sources to Europe via cables under the sea.

    But in recent weeks, two big industrial backers have pulled out.

    And the Spanish government has baulked at signing an agreement to build solar power plants in Morocco.

    Desertec was set up in 2009 with a projected budget of 400bn euros to tap the enormous potential of solar and other renewables in North Africa.

    The hope was that by 2050, around 125 gigawatts of electric power could be generated. This would meet all the local needs and also allow huge amounts of power to be exported to Europe via high-voltage direct current cables under the Mediterranean sea:

    But three years later, the project has little to show for its efforts. Two large industrial partners, Siemens and Bosch, have decided they will no longer be part of the initiative.

    According to Dr Daniel Ayuk Mbi Egbe, a professor at the University of Linz in Austria and an expert on African solar resources, this is not good news.

    Solar storm as desert plan to power Europe falters

  33. imithe

    I don’t understand this comment:

    “We know that a property boom is never caused by supply and demand. Property booms and property bubbles are always and everywhere caused by too much credit…”

    If supply was doubled overnight, 136 pages of property porn would not maintain prices.

  34. Here comes the 100th comment & my min wage/alcohol availability ratio. The defining economic acid test! Was in Oz in 1999, my fond memory (apart from the reliable weather) was the standard of living and how much ‘bang’ you got from your buck. Back then min wage in Ireland floated around £5 (Ahhh the punt) and a pint of the plain cost around £3, so you were into your second hourly rate when navigating toward your second pint. Downunder I worked bars, sites and even mobile sales for a while (1 day) and min wage was $12-$14. A Schooner of beer cost anything between $3 – $4 which hence allowed a guaranteed 3 beers on 1 hourly wage. I could go in supermarket and feed myself with $5 bucks… Was absolutely shocked this year when I heard Aus min wage now $17 and a beer can cost $9 – $11. Whats more a simple coffee, once $2 is now $9 on average. I get inflation, but the value and cost of living has obviously deteriorated…. Furthermore when I went the Irish punt (Ahhhh bless) got $2.50 Australian and peaked at $3. Today a €1 (remember £1=€1.27 once upon a time) pays $1.24 Aus. Meaning Aus currency stronger than our old punt, (ahhhh..). For a population of 22 million. Please God most of our diaspora have brought the Irish bust experience with them and not jumped from the pan into the fire.

    • joe sod

      excellent post joff23, its only 10 years ago that australia was a cheap country by foreigners standards, there were actually australians coming to ireland to work. People forget with the doom and gloom in ireland today that in the late 90s, a golden era in ireland, dublin was regarded as the most happening city in europe. But then by the 2000s irish people took it all for granted and the arrogance crept in which eventually destroyed ireland, the same is happening in australia today afterall human beings are the same the world over.

  35. tuatha

    David, that is a the war memorial in Martin Plaza (it hasn’t been ‘Place’ for 30years), not the Cenotaph(literally empty tomb)which is at the southern end of Hyde Park, about a kilometre away.
    You claim to cool down the economy, the central bank raises interest rates, – the Reserve Bank has lowered interest rates on all but one of the last 8 quarterly reviews (no change once, the review before last – currently at historic lows not seen since the early 1960s.
    The A$ has NOT risen because the local banks are borrowing foreign money but because the majority of export contracts, esp minerals to China, are written in Oz dollars.
    Not big on basic observation are you?
    As with your prognostications on Ireland Euroland & the Universe, it makes one wonder about your interpretations or are you just another tap dancer with a rabble-soothing line spruiking self published books like the self help crapola?
    interesting that I neither saw nor heard a single report of your visit. Shared a venue with the Lord Mayor you say? Sure it wasn’t Dick Whittington’s cat?

  36. oiltrash_in_perth

    having worked around the world in the oil & gas business for the last 20 years I moved to Perth in 2008 to work on some big gas projects. Perth is the centre of the current boom and only comparable to whats happening in Brazil just now. Anyone who thinks this is not rocky should take a look at BHP’s Olyympic Dam or Port Headland Inner harbour projects along with the coal seam gas projects in Queensland. These projects have been shelved almost overnight and are the tip of the iceberg. The economy in WA is supported by the crazy wages paid to low skilled workers to live in the mining/work camps in the Pilbara, lots of these folks are going to be released back into the real world and its going to be a shock. $1000 AUD/week will rent you an average family home in Perth just now if you can find something to rent,the most expensive rentals in Oz just now are in Karratha, Onslow ,Newman and other well known places in WA … Its going to be a big bang when it happens down here but for now its 300 days sun a year and surfs up …

  37. [...] As bad as things are, Ireland is still a great place to live, and things are now, finally beginning to improve. Meanwhile, there are some who say Austrailia’s boom is coming to an end. [...]

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