July 30, 2015

China's crisis could be the pin to pop the property bubble in Australia

Posted in Irish Independent · 117 comments ·
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Last week for the first time the average house price in Sydney passed one million Aussie dollars. This is big news for us because the majority of the Irish people who have moved to Australia are employed in offshoots of the property industry. When property markets rise, there is an attendant rise in demand for almost everything. When credit fuels the property party, the demand for employment rises, so too do wages and the cost of living. Perhaps it’s not surprising that friends in Australia have horror stories about the price of almost everything.

 

But excessive house prices, although trumpeted by some as a sign of economic strength are usually the very opposite; they are more typically a sign of dreadful economic mismanagement.

We know all about this, when a mania takes over a housing market and the banks get in on the act by lending “hand over fist” to gain market share – driving the bank’s share price yet higher.

The higher house prices, the more vulnerable the market is to a massive reversal. Sometimes this reversal can be triggered by events that seem far away but suddenly appear right on your doorstep.

For Australia, events in China could well be the trigger to make Aussies realise that while house prices may fluctuate, debt doesn’t. Debt is real and if a market that is being driven by excessive lending slumps, the post-crash society will be characterised by excessive debts.

The canary in the coalmine for the Aussie property market is the Aussie dollar, which has been falling precipitously. It is now at a six-year low against the US dollar. Typically, ahead of a market slump in a country, the most liquid asset associated with that country is sold. Australia’s most liquid asset is its currency.

Here’s where China comes in.

Australia is “China’s quarry”. It exports all sorts of commodities to feed China’s apparently insatiable demand for raw materials. This Chinese demand drove commodity prices facilitating a boom in the vast mining outback of Western Australia.

However, China is slowing down quite quickly and in addition, its stock market, which had risen rapidly, is now in free-fall. Over 90 million small accounts with stockbrokers have been opened in China in the past three years – that’s bigger than the population of Germany. Many of these people have been borrowing to chase the stock market higher. This type of leverage can make your gains look spectacular on the way up, but can be crippling on the way down and yet again, the debt remains for years after the share prices have gyrated up and down.

As China slows, the big challenge for the Politburo will be to keep the economy motoring sufficiently to absorb new workers and to re-engineer China away from being an export-driven, manufacturing hothouse to a more sedate, consumer-driven economy.

Up to now, the Politburo has been amazingly successful at orchestrating this enormous economy, but lots of outside observers are very worried.

Wages in China have risen significantly in recent years, and now its factory workers are the best paid in developing Asia.

The total annual cost of a Chinese manufacturing worker (including salary, benefits, social security payments and bonuses) is $8,204, compared to $4,481 in Indonesia, $3,618 in India, $2,989 in Vietnam, and $1,580 in Bangladesh.

The whole notion that China is the world’s most competitive place to produce is no longer the case. It is facing tough competition.

While rising wages are a good thing and are what you would expect, the fear is the Politburo can’t manage the transition from the cheapest workforce in the world to something more subtle.

However, economies rarely move in straight lines and there is a real risk that the Chinese growth rates stall from here, not least because fundamental demographics are moving against China.

China’s big challenge has always been whether it would get rich before it got old. The answer is no one is really too sure because although it is getting obviously richer, it is definitely getting older too.

China’s working-age population fell last year.

The population stood at 1.37 billion at the end of 2014, according to the National Bureau of Statistics. This is an increase of 7.1 million on the previous year.

But the working-age population, between 16 and 59, fell to 915.8 million last year – down 3.7 million from the end of 2013.

And the shrinking labour pool is driving up labour costs and eroding the manufacturing and export competitiveness that helped fuel China’s 30-year expansion.

The population aged 60 and over, by contrast, rose last year by more than 10 million to 212.4 million. This is 15.5pc of the total population.

China introduced its controversial family planning policies, which limit most couples to only one child, in the 1970s to rein in population growth. Now it doesn’t have enough young people.

And of these young people, nearly 116 boys were born for every 100 girls last year, while the gender ratio in the total population was 105 men to 100 women. So not only are they having too few children, they are having far too few girls.

Therefore China has a few deep issues to sort out. Up to now, most people saw the past 30 years’ economic miracle and concluded that China would find a way again. In recent months that view is being reassessed. This reassessment focuses of countries whose dependence is significant and of course, China’s quarry, Australia comes to mind.

Right now, the Aussie housing market looks to be madly overvalued.

Without commodity wealth, Australia looks like a large leveraged bubble.

But as we know in Ireland, these bubbles can inflate for a long time before they burst. However, timing in these matters is not actually everything, despite what the cliché says.

When it comes to the fallout from housing booms, Aussies would be well advised to heed the wisdom of John Stuart Mill, the 19th century English economist and philosopher, who said of market booms and busts that “the bust doesn’t destroy wealth, it merely reflects the extent to which wealth has already been destroyed by stupid investment decisions taken in the so-called boom”.

When we see average house prices hit one million dollars, we can’t say we weren’t warned.


  1. Grzegorz Kolodziej

    I liked the article – well researched and put in a wider geopolitical context. There is a nice flow between this article on the implication of China’s slowdown on Australia and your last article on the implications of UK’s growth on Ireland. Now the question is how does it translate into Ireland’s situation (macroeconomic and political). One consequence would be hordes of people coming back from Australia (or maybe not? – more than half of Poles left Ireland after the crash, but they did not necessarily go back to their own country – but rather to new destinations like Norway or supposedly “crashed” Iceland; will it be the same with Irish immigrants in Australia after their crash?). Another might be implications of the coming crash in Australia on the UK’s EU referendum (provided it won’t be rigged).

    If there was one thing I could add it would be that as far as I remember, only 15pc of Chinese own stock markets shares, which makes China less vulnerable than the US, where everyone owns it, if not directly than via their pension funds (this and the fact that when the US was able to cope with 5pc interest rates it was when their debt was much lower; China appears to be much better suited to cope with high interest rates).

    Another thing is that the reason Chinese bought shares in first place is that their interest rates are so low (this pushes people in Ireland to go bananas and buy million euro houses in Dublin – I suppose that’s even worse than losing on shares because with a mortgage around your neck you cannot even hand in the house key, like in the US).

    My tentative prediction is that the Chinese stock market will rebound when the US starts QE4 because then the speculators will see that even though China is screwed, the US is more screwed. I think you buy too much into the US-recovery narration, David. Look at the lanour participation rate and the U-3 (if you are unemployed for more than 5 years in the US, you are no longer counted as unemployed).

    One more thing to consider – Chinese debt. It’s funny, because China is US’s creditor, but it also has massive internal debt. But… China is pegged to the dollar. They do not have to be though, and if China decoupled itself from the dollar, then its currency will go up sharply as it would Deutsche Mark if it was introduced now. That would screw their exports, but knowing their government they may always some funny compulsory money exchange – like in Poland in 1950 where they confiscated 2/3 of peoples savings introducing the new zloty with draconian fixed exchange rates, thus decreasing the amount of money in circulation and preventing Hungarian style hyperinflation (which is another form of money confiscation).

    For China has this instrument:

    http://www.breitbart.com/national-security/2015/07/26/chinese-government-instructs-media-how-to-cover-stock-market-crisis/

    That would not happen in Ireland with RTE or Irish Times pre-2007 informative and balanced debate on the Irish property bubble – we have the public media which we generously sponsor (1bn in Celtic times) so that they remain unbiased by vested group interests. Oh no, hang on – nomen omen, a propos avuncular advice that certain people should hang themselves by someone who sounded like a moron and probably was a moron – that’s actually a bad example ;-)
    Then China can pay its internal debt with the old currency and import things with the new one if needed (that’s be only food for they produce everything else – this would be a chance for Ireland).
    If China embarked on say, even 10pc gold standard, its currency would be worth even more. Of course you need authoritarian system (authoritarian, cause I do not think China is a dictatorship) to do such tricks with compulsory money exchange (unless you do it in favour of the old currency holders, like West Germany’s present to DDR mark bearers).

    “But excessive house prices, although trumpeted by some as a sign of economic strength are usually the very opposite; they are more typically a sign of dreadful economic mismanagement.”

    This sentence should be sprayed on the Spire or better still, David Drumm should donate some of the moolah he had stolen from taxpayers towards carving it in granite on College Green thus sounding a note of caution in relation to unsound property investments

    • Adelaide

      Grzegorz
      Yellen has ‘strongly’ hinted of a rate rise in September, perhaps it’s the seven year itch. If so your prediction of US-China rebound reality-check will happen sooner, Gerald Celente has trended this consistently, ps it would be wonderful if David could get Celente to Kilkenomics. Celente and Keiser on the same panel, now I’d pay gold to see that!

      • Grzegorz Kolodziej

        Hmm…
        As to David, I always dreamed of his debate with Constantin Gurdgiev, who has a very profound knowledge of Ireland’s economy – I have never seen them in the same room though (are they on speaking terms?).
        So imagine this: Celente v Dave v Constantine v Keiser (but it would have to be timed, otherwise Keiser would interrupt too much) and we’ll throw in Joe Higgins just to have a laugh (the latter is virtually indistinguishable in his manner of speaking from the 1970s Polish United Workers Party first secretary, the astonishingly boring Edward Gierek, who in an inexplicable bout of whimsey imported very fast Honda motorbikes for the communist militia). Personally I would add my favourite European politician, Godfrey Bloom (I prefer him to Farage for there is too much hypocrisy in Farage) – a tremendously good speaker and a verbal pugilist too:

        https://www.youtube.com/watch?v=OnGxfrWaqP8

        I red Yellen’s statement (submitted to Congress) and it was fraught with conditionals. I am hereby attaching a link to all fruits of her labour; however, as I found out that reading her full statement has utterly jargogled my brain, I have managed to tease out the gist of it:

        “If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalize the stance of monetary policy. Indeed, most participants in June projected that an increase in the federal funds target range would likely become appropriate before year-end. But let me emphasize again that these are projections based on the anticipated path of the economy, not statements of intent to raise rates at any particular time.”

        How should we read this baffling statement?
        As conditional to:
        1. Economy evolving as they expect, which may or may not happen.
        2. Then it would be appropriate to raise rates.

        Is the near zero interest rate now appropriate? No, it’s sheer madness, particularly if the itch causing marriage of zero interest rates with what we learned from the Austrian school about the boom and bust cycles has crossed the 7 years bursting point.

        So what’s Yellen’s goal, apart from her urge to be loved and admired?

        I think it is to sustain that narration that even our David fell for that there is an economic recovery in the US; maybe to strengthen the dollar too.

        Then there were question to Mrs. Yellen about raising rates and to one of them questions she answered that we are going to go very slowly and if it’s causing pain, we are going to go back.

        All of it makes me quite iffy on her raising rates substantially (she probably will by 1pc or so). I mean, I am a strong believer that rates will go up anyway (albeit maybe not this year), and maybe even not 5pc, but perhaps 8pc and more – but not as a result of Yellen’s decision, but as a result of the biggest bubble in US history (stocks + property + government bonds + private debt) popping as a result of China decoupling itself from Wall Street.

        You see when Reagan was in power, then whatever can be said about him the economy was strong eventually (after the initial recession he caused), so they could afford high rates. Now we see the labour participation rates in the US lowest since 1977 and David who believes the unemployment figures are real…

        She was also asked what she was going to do, if she raised the rates, the economy would stall, and then she would go back to zero and that would not helped. She was not prepared for that question so she did not answer.

        To summarize it, I read Yellen’s statement as an attempt to gorgonize us into believing that the US economy is so great that they can afford raising the rates or talking about it.
        By the way, the sales in the US have dropped. Also, FED hopes 2015 will see 3pc growth which would lay foundation for raising interest rates, but for the target to meet after 1pc in the first half they would need something like 5pc in the second half and that ain’t gonna happen. The Small Business optimism index dropped. The US bar and restaurant sales fell by 0.2pc IN JUNE!

        Anyway that’s as much as I know about the current situation with the US interest rates. I wonder if at the end of the day would it make any difference whether the US bond market collapses because they would have to raise the interest rates to over 5pc resulting in new homelessness or because they would do Q4 and that would not work.
        I am glad that David wrote a very good article on the impact of China’s shrinking demand on Australia’s economy, but he should do the same with China’s impact on US governments ability to issue new bonds (and Chinese are also one of the biggest property investors in the US), so also their ability to finance their army and maintain the dollar as their inflation exporting tool (which allows them to issue new bonds and keep the rates low, so it’s almost a Catch 22 with Yellen and rates).

        Could Tony write what do the sales and job market look like in Canada compared to previous year?
        I have found a wonderful 3 minute video explaining in a jocular way the way brains of the likes of Yellen are wired:

        https://www.youtube.com/watch?v=Li0no7O9zmE

        • Adelaide

          Get yourself down to the next Kilkenomics. Constantin is a regular at Kilkenomics, himself and David have been on the same panel a few times. The best ever show was heavyweight Keiser and his Plucky the Duck versus lightweight Karl Whelan, hilarious and surreal.

          • Grzegorz Kolodziej

            I have checked the calendar fro Kilkenomics – 5th to 8th November – that will be a perfect timing for me! There is a 90% chance I will show up; the only factor which might hinder it is my family situation (my mum’s second cancer – non-small cell lung).

            Other than that – that might be my highlight of the year! Actually many thanks for that idea for I would not have thought that’s the place where East (Constantine) meets West (David) and they all meet the Wild West (Max).

            Pity that yous live so far – Tony Canada, Stan the US, you Australia I suppose; Deco, Cooldude and DB4545 – are yous going?

            I forgot to attach that link to Yellen’s yelling:

            http://www.federalreserve.gov/newsevents/testimony/yellen20150715a.htm

            This probably has to be red in conjunction with that satirical approach to Mrs. Yellen; though it’s actually bittersweet ’cause if Ireland was dragged by the US/Oz/Uk than it will THE European country on the free-fall when the whole thing starts to cave in, starting from FED’s leverage (bigger than Lehman), for who is going to bail out FED and the US government (and why?):

            https://www.youtube.com/watch?v=xrTgW9TpFgE

            I think I watched that Keiser’s appearance in Killkenny on youtube; he was unusually quiet and then he went berserk. That would have been even better had Seán Quinn been present – I’d love to see all those beef-witted retards debating Constantin and Keiser and trying to outwit David…(Bertie, who would be ideal as the kolchoz manager building his stadiums in the latest stage of alcoholism – which probably would not affect his avian brain anywya; David Drumm, who sounded stupid enough and cowardly enough on his tapes to be a high rank local apparatchik in Stalin’s era…)

            Did any of them ever argued over something fundamental in macroeconomics?

          • Adelaide

            I have been to two Kilkenomics but unfortunately I can’t make it this year. Both great weekends. From the experience my advice when choosing what Panels to book would be to be swayed by the calibre of the panel rather than the discussion topic.
            A mediocre panel discussing a topic close to your heart VERSUS a top quality panel discussing a topic you’re lukewarm on, go for the second choice, (as the discussions always veer off the initial topic anyway).

          • I went to Kilkenomics the time before last. It was great meeting bloggers there and traversing the taverns.

            As far as the courses/events were concerned, they were a mix.

            The chair was often a stand up comic and they did a great job of the intros and lead-ins for the debate.

            The big disappointment for me that we were except for prof Bill Black and a certain Max Keiser fed a steady slop of Keynsian economics from the participants.

            The audience on the whole wildly applauded the two errant souls but there was no follow up. Many questions from the floor were given the usual pap.

            I decided not to attend until the speakers represent a more rounded balanced point of view. Going again would be at this point a complete waste of time and money.

        • Here you go Grzegorz

          Macleans is a national magazine.
          Seems Canada is coming to a screeching halt with a real estate bubble ready to pop.

          http://www.macleans.ca/economy/economicanalysis/how-canadas-economy-went-from-boom-to-recession-so-fast/

          • I just bought a small house on a rented lot.
            We paid 105000 CAD and pay a “pad rental of 576 per month. That pays for water, garbage, recycling, property taxes, road and boulevard maintenance. That means we paid about a 100-120000 value for the land. Total effective 220,000 range for a 1986, 960 sq ft 2 bedroom modest home in good shape.

            Last three years we could have paid 50,000 more. Last sales 5 months ago were in the 125-140 range for similar units. It is a 55 plus complex so people buying are retired with money in hand downsizing. A lot after loosing a spouse.

            There has been a little more activity in the RE market here but not a lot of change in prices which are 35% below 2008-9.

          • PS Buying a similar property freehold would cost more in the range of 300-350,000 on this little Salt Spring Island.

            The climate can be described as northern mediterranean. Warm dry summers and cool damp winters. The best climate in Canada.

          • Grzegorz Kolodziej

            I would have never found that article. I’ll read it tonight. I actually wonder is there any western country that does not have property bubble or had one in the last decade? Germany comes to my mind; amazingly, flats in Berlin are cheaper than in Warsaw while East Germans move to Poland to work – who would have predicted both facts 20 years ago:

            https://www.youtube.com/watch?v=Ka5QClJ68QY

            , but they might be starting one. All Anglo-Saxon world has been having one. Poland has one, initially only in larger towns (Poland avoided a bubble for a long time because of a smaller debt and much more restrictions on getting loans, but this was offset by a foreign investment bubble in main cities, driving prices through the roof and people to desperation – to me it looks like foreign investors and well-off Poles (10-15pc of people there are doing very well and this what you mainly as a tourist) bought apartments for themselves that they will have to sell to themselves; Moscow also had one, even though it is such a different system.

            On a completely different Tony -for you might know if you are good at spotting good houses – do you know how to remove a 6 inches water stain from the ceiling? I do not want to/cannot paint the whole ceiling ’cause its not my gaff where I am staying over weekend. I thought Kilz might be good, but Woodies is way too far from where I am staying; another thought of mine is to buy bleach, dilute it with water and treat it with a sponge or get hold of empty spray bottle.

          • Grzegorz

            I do not have any direct knowledge myself but I am staring at one of my own on the ceiling of the bathroom!!

            Maybe one of these suggestions can help you

            https://www.google.ca/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20to%20remove%20a%20water%20stain%20on%20ceiling%20gyproc

          • Grzegorz Kolodziej

            That stain sealer on that video looks great, but I am not sure if I’ll find it where I am (small shops, Tesco, etc – no Woodies). Well I have till Sunday anyway. Refuting the multiplier arithmetic as described in the “General Theory” was relatively easy compared to that conundrum. It’s a popcorn kind of a ceiling so I cannot use the putty-knife – not that I see any around anyway (all I see is a very confused cat looking alternately on me and the ceiling, trying to figure out why am I staring at the ceiling fro half an around ;-)
            Here is what I’do: I’ll buy Bleach and since I do not think Tesco will have water spray bottle I’ll dilute with water 1:3 and if it works I’ll thicken the Bleach and if it does not:

            https://www.youtube.com/watch?v=jHPOzQzk9Qo

          • My inclination would be to look for a sealer before you repaint. A good paint store should guide you. OR the net!!

            Nice to see the mind occupied with a trivial problem rather than these heavy worldly affairs.

            Me? I have just scrumped some apples from a field. Soft yellow skinned. Then I got a hand operated corer/peeler and I am processing a half wheelbarrow load of free apples to make apple sauce.

            Got to keep myself busy somehow!! :)

          • McCawber

            The usual trick with “repairing” stains is to make sure it is well dried out.
            Then apply diluted polybond (or some such). Follow the instructions on the tin.
            Then apply the finish when appropriate.
            But I’m not an expert.

          • Grzegorz
            I do not grow apples. Scrumping was what I did. There are a few ancient abandoned trees near here which locals visit to help themselves or they are eaten by deer or rot.

            Saltspring and Vancouver Island used to be the or a center for fruit orchards. In the 1950′s onward the hydro development for electicity also stored huge volumes of water that was available for irrigation in the interior of BC, primarily the Okanagan area.
            The coast area could not compete.

            The residual is the miles of orchards that are left in remnants in the subsequent housing developments. Many properties have old (over 100 year old) trees that still produce. Much of it is wasted as people are too lazy to pick and process their own preferring to bar b q and drink beer and go to the store for food.

            http://www.wsj.com/articles/SB10001424052702303738504575568070411401644

          • Grzegorz
            I do not know the variety. They are early, yellow, soft and tangy. The closest I can come to is the description for Yellow Transparent.
            They make good apple sauce.

          • Grzegorz Kolodziej

            Tony,

            “Much of it is wasted as people are too lazy to pick and process their own preferring to bar b q and drink beer and go to the store for food.”

            That ubiquitous bovine chillax attitude of the vast majority of contemporary people you describe, so different from the era of unrestrained economic freedom and ethics based on delayed gratification which produced combustion engines, Chopin and Wagner, great works of theatre and literature, photography and cinema, computer (Charles Babbage) and mathematical logic based on quantifiers (Gottlob Frege) and which colonized distant continents so successfully that (in keeping with David’s previous article on Ireland and commonwealth) that in 1900 France had $2,849 GDP per capita, Switzerland $3,531 while Australia and New Zealand $4,299 and $4,320 respectively and were the richest countries in the world; that decline of the bovine West prompted me to reach Edmund Burke’s “On Taste. Introductory Discourse” to find this quote for you which reflects that kind of attitudes:

            “For sensibility and judgment, which are the qualities that compose what we commonly call a taste, vary exceedingly in various people. From a defect in the former of these qualities arises a want of taste; a weakness in the latter constitutes a wrong or a bad one. There are some men formed with feelings so blunt, with tempers so cold and phlegmatic, that they can hardly be said to be awake during the whole course of their lives. Upon such persons the most striking objects make but a faint and obscure impression. There are others so continually in the agitation of gross and merely sensual pleasures, or so occupied in the low drudgery of avarice, or so heated in the chase of honours and distinction, that their minds, which had been used continually to the storms of these violent and tempestuous passions, can hardly be put in motion by the delicate and refined play of the imagination. These men, though from a different cause, become as stupid and insensible as the former; but whenever either of these happen to be struck with any natural elegance or greatness, or with these qualities in any work of art, they are moved upon the same principle.”

          • Nice one Grzegorz

            I did not mean to imply earlier that there are no new orchards, there are.
            Harry Burton on the island here has catalogued over a hundred antique varieties so we do not have to eat the 4 main brands from Canada, US and New Zealand that arrive in the stores.

    • cooldude

      Hi Grzegorz, the journalist who asked Yellen the very real question has since been forced out of the Wall Street Times. These Fed meetings are a joke and the Fed itself is a privately owned entity whose shareholders are the commercial banks it is supposed to regulate. It even pays a 6% dividend per annum to these banks. It’s sole function really is to protect the interests of these banks and to screw everyone else. In fairness you have seen through this recovery nonsense which is and has been non existent for the real economy. They don’t give a shit about ordinary workers or small businesses they just simply do what is best for the banks and the gambling elite who use the easy money to gamble on assets.

      An easily expandable money supply will always create these asset bubbles. David always looks at symptoms but never the real causes. Do some analysis on our system of privately owned central banks and their owners the commercial banks who issue 97% of what we use as money through their loans. I like your analysis and it would be interesting to get your views on this parasite system which is slowly but surely eating it’s host.

      • cooldude

        Actually the journalist who got fired asked the wrong question at the previous Fed meeting. It’s all bullshit anyway when she can’t take a question she wasn’t prepared for. This guy will probably get the bullet as well for asking a good question.

        http://www.zerohedge.com/news/2015-07-30/fed-reporter-pedro-da-costa-leaving-wall-street-journal-after-asking-yellen-uncomfor

        By the way congrats to Tony on your new home. I hope it works out well and I am glad to see your patience has been rewarded.

        • Thanks Cooldude
          Every square foot of available space has been turned to vegetables growth. Plus an allotment. It has been a lot of physical work and the summer is hot this year with weeks of 30+ days. I have benefitted now from delicious food and the exercise. I am 16 pounds lighter than when I visited Ireland last winter!!! So as I have maintained, a little deflation is a good thing!!

          At some point I still aim for a 5-10 acre property to be self sufficient. Prices here are over the top still at around 450,000-600,000 for such pieces.
          There are two adjacent properties for sale. 15 acres, 10 woodland and 5 pasture in poor heart with a shack on rented for 700 a month. Price $550,000 and a 10.8 arce piece in pasture with a good barn and a couple of smaller buildings. Land in poor heart and taken for hay only the last 15 years. Half of it straddled by high transmission electric power lines. Asking $525,000. Has very good aspect with a gentle slope South-South west.

          As you can see, prices are out of sight.

      • Grzegorz Kolodziej

        Thanks. I would love to do that, but its just that I am snowed under with work and to cap it all, I have just created a water stain on a ceiling of a living room where I am staying for the weekend – so it does not help me in to focus ’cause such small things always drive me mad – and have to find a way of removing it before she’ll come back…
        With David, I have a feeling that he is open-minded enough to abandon Keynesism (he is not a pure Keynesian anyway for he writes about debt in worrying terms from time to time; I’d say he is more akin to Steve Keen), but it would be awkward for him to do it now after so many years and all Keynesian articles he wrote; and he probably has his doubts about other schools too which are strong enough not to embark on any of them alternative views (I am a bit of an Austrian persuasion, but sometimes I have doubts even on that; it’s hard for me to stay within one theory without constantly X-raying it and trying to find flaws in it… – I would probably not make a good fanatic, such is my skepticism)

        • coldblow

          I have never been accused of being a handyman, and avoid DIY as much as I can, but I think you might need to let it dry off before trying to paint it because it will show through.

        • McCawber

          The only theory you need to follow is McCawber’s (The original one)

          • Grzegorz Kolodziej

            Thanks :-)

            That Bleach thing worked wonders for me so far. I dried it out with a hairdryer, I bought Bathroom cleaner, washed the entire house with it, put the rest of it to the loo, ended up with an empty spray bottle, put 1/3 of Bleach and 2/3 of cold water (hot water would I think solidify the damp), took the cat out the room, sprayed it a few times, and although it is not entirely pristine, it’s like chalk and cheese compared to what it was yesterday. The cow’s dung colour is mostly gone, there are some dingy rings still left, but I am going to repeat the whole procedure when it is dry. The important thing is that whatever is left is not going to trigger that kind of reaction upon the owner’s return:

            http://weknowmemes.com/2012/02/the-fuck-is-this-the-fuck-was-that/

      • Grzegorz Kolodziej

        I did not someone was sacked over that. I know that the journalist who asked President Obama what country in the Middle East has nuclear weapons was banned entry to the White House.

      • Deco

        Do we still have freedom of speech when somebody is removed from the WSJ for asking a serious and relevant question ?

  2. McCawber

    Heavy stuff.
    So David here’s what you can do for Australia, assuming you might know someone who knows someone.
    Write a letter giving a brief history of the Irish boom/bust up to the bailout say.
    Less than a page long, if possible, mainly bullet points.
    Then attach a copy of the transcripts of the Dail Bank Enquiry.
    Send this letter (via that someone you know) to the Prime Minister and Finance Minister of Australia.
    Firstly advise them to stop digging (foundations I mean).
    Were I you I would also advise them to start praying that they haven’t left it to late.

  3. Brizey

    Why can’t they just start selling iron ore to India, Thailand or Indonesia?? :)

    Lots of products are more expensive in Ireland than Australia as well, just saying.

  4. DB4545

    An Island that is a farm/quarry to service other economies,has low population densities relative to its land mass is experiencing a property bubble and ridiculous asset prices? I understand that there are places on both Islands where human life can’t prosper(the Simpson desert or Leitrim) and that people like to live near the coast. The parallels with Ireland are striking. The writing is on the wall. Send over the “how to f**k up a Country manual” in one easy lesson to the Aussies. It’ll save them some time. Fair dinkum.

  5. Deco

    Aussies are about to renew a relationship with a powerful concept.

    “consequences”.

    Don’t worry about China. China has spent a fortune making their internal transportation system more efficient. And the results are impressive. China will focus on other areas of productivity enhancement. They have the money and they have the manpower.

    There is a speed bump coming up. And it is serious. There will probably not be another construction boom in China for a decade. China will focus it’s resources on other areas.

  6. sravrannies

    g’day DB4545. Didn’t the poulation of Leitrim already emigrate to Australia? Or was that Roscommon.

    Last name: FLANAGAN
    First name: LUKE
    Full name: LUKE FLANAGAN
    Sex: M
    Imprisonment place: Roscommon
    Document date: 00/00/1822
    Crime desc: Highway Robbery
    Sentence: Transportation 7 yrs
    Petitioner: Convict and Robert Galvin
    Document ref1: PPC 1679
    Comment1: Robert Galvin , convicts brother in law was convicted for the same crime.
    Comment2: Convict states that they were prosecuted out if revenge. Several character refe
    Comment field number: rences including the minister for Kilkeevin, Co. Roscommon.

    Source:National Archives

    Peter

    • DB4545

      sravrannies

      G’day.I have no doubt they have as they’ve opened pubs in most places on the planet. It doesn’t matter if your mouth is as dry as a Kookaburra’s a**e in Kalgoorlie or Mohill a Leitrim native will see you right for a beer. Paddy Hannan from Clare opened up the gold rush in Western Australia. Aussies like to sneer at the cashed up bogans like Paddy now but it was men like Paddy and Lang Hancock that kick started the resources boom in Australia. Those cashed up bogans working on FIFO mining operations together with Chinese investment are driving property prices to insane levels in the coastal cities. And we know exactly where that will end. I hope the good ladies in the skimpy bars (I visited purely for research) on Hannan Street are raking it in while they can.I know who’s making the money in the Tart’n’ Miner and it ain’t the miners.

      DB

      • joe sod

        I have to say its a bit frustrating when posters on this site go off on their own pet topics. They post the same stuff every week no matter what the article is about. Thank you DB4545 in discussing the actual topic Australia’s reliance on China commodities demand. My own experience of Australia from 2002 was that then it was cheaper than Ireland. The australian dollar was very weak but things were looking up as some were seeing maybe the start of a new commodities boom. Australia had already experienced one in the 70s which ended in the mid 80s. This was mainly driven by Japanese demand for its commodities then. In 2002 Europe and Britain especially was too expensive for them because of the weak dollar. I remember one guy reminiscing about his trip to Ireland in the 70s when “our dollar was so good”. Tourism was its biggest industry followed by mining and agriculture. Roll forward to today and the commodities boom has destroyed its manufacturing base. Ford and Toyota are closing their australian car plants. The collapsing commodities demand has resulted in large trade deficits as they import so much manufactured goods from Asia and europe. I think they have a particular weakness now for german cars. In 2002 you rarely saw european made cars. But one big advantage Australia has over Ireland is control of its currency. I think interest rates are still high in order to try and control the housing boom. I think they will wait for the commodities crash to work through before slashing interest rates. Then you will see the dollar fall through the floor as it did before.

  7. McCawber

    Prediction.
    Mankind will in the next 50 years reach a point where machines will be able to do everything more cheaply and more efficiently than man can do himself.
    As a result current economic models and ways of thinking are obsolete because it’s going to take a lot of planning and social engineering to prepare 10BN of mankind’s best for obolescence. 0% interest rates and almost no inflation are the harbingers of this future.

    So people put on your thinking caps especially those of you who under 40 years of age because you are going to see this evolution.
    What are you all going to be doing with yourselves in 50 years time and much more importantly how are you going to get their in one piece (physically, financially etc)

  8. Mike Lucey

    I was in Sydney some months ago visiting my daughter and was shocked at what kind of a ‘tin roof’ house even AUS$2m would buy in the area. Most folks that I talked to were fully aware of the bubble and what happens to bubbles. There are enough Irish over their to give them a blow by blow description on how property bubbles develop and what bursts are like.

    It seems the driving force behind these overinflated prices in Oz are the Cash Chinese coming in for property investment. This suits the banks as its an inward flow which allows them to leverage up.

    The same is the case in Auckland where I visited my other daughter. It seems 40% of houses sold in the Auckland area in the last couple of years was to non resident Chinese and to make matters worse for the locals, many of these houses sit idle.

    In the Auckland area the local sellers (many retirees) move to cheaper parts of the country and lodge huge amounts of surplus cash with the KiWi banks for them to leverage up.

    China is having a huge influence in both Oz and NZ, good as in trade and bad as in property speculation. All eyes are on China at the moment.

    A Paul Craig Roberts article, ‘US Wants to Coerce Russia Into Submission’, here, http://sputniknews.com/politics/20150729/1025187577.html#ixzz3hIpJ6arr should possibly include in the heading, ‘… AND Washington’s message to China, via the IMF, is: ‘Come to us.” is worth a read.

    They (China) have a lot of serious decisions to make shortly about which road they will travel along, the BRICS road as leaders or the Western Road as a sidekicks.

    I wonder which they will choose.

    • Deco

      Beijing is not looking kindly on Chinese citizens having “boltholes” in other countries.

      I was told that by a committed member of the Chinese Communist Party, who does not hold official power, but who is of the belief that such behaviour is highly correlated to law breaking, corruption, and abuse of wealth within China.

      In other words, the rank and file CCP membership are with the current Chinese Politburo, and want the regime to do more about this.

      This is the internal dynamic in the CCP.

  9. https://www.goldmoney.com/research/analysis/chinas-1929-moment?gmrefcode=gata

    Maybe the 20,000 tonnes of gold that china is speculated to have stashed will play a part in their decision making. 20,000 tonnes got the US reserve currency status in 1944 at Bretton Woods.

    • Constant over spending by the US reduced those reserves to 8200 tonnes by 1972 when Nixon reneged on the gold redemption of the currency note.

      It has been all downhill for the world economies since then with a declining standard of living. Perhaps China will arrest that trend with a stable currency back by honest money and we will all be able to benefit from the innovation and productivity of mankind instead of being indebted to and indentured to a lifetime of financial servitude, and surreptitiously taxed with inflation that robs the poor first but benefits the central banking fraternity.

  10. [...] – Bloomberg Keep an eye on the rout in junk bonds – it could spread fast – MoneyWeek China’s crisis could be the pin to pop the property bubble in Australia – David [...]

  11. McCawber

    Tony you mentioned a DJ propaganda index in an earlier topic.
    I’d never heard of it but it’s an interesting concept.
    I use a BS radar based simply on watching (body language) and listening to guests etc on CNBC and Bloomberg.
    It’s totally subjective but after watching the same guests and presenters for a while you get a sense of how things are.
    I’d include Yellen and Draghi and such like in the people to watch BTW.
    My BS radar didn’t save me in 2008 but it certainly mitigated the damage incurred and other family members were grateful for the warning which didn’t come too late but was to some extent misinterpreted.
    My index flagged in June of 2008 but obviously you have to wait a bit to make sure it wasn’t a false +ve. By late July it was too strong to ignore. A phrase that came to mind at the time. “These guys haven’t got a clue what they’re talking about and they are afraid”. It was the second bit that really stuck out, they were afraid.
    I only recently got a flicker on my BS radar but it hasn’t had any reinforcing to date. A well known speculative financier was definitely showing signs of “worry” about the Greek situation and it’s impact on his company (Things in Greece have calmed down since).
    But it’s a pointer. If you “know” the guys with their own money invested they are the ones to watch, CAREFULLY.
    I do get a sense that the FED want desperately to nudge interest rates up. I see this as purely a desire by the FED to give a signal of confidence in the economy.
    Nothing else, call it propaganda.
    Which brings me to your DJ Propaganda Index.
    Is this a real index based on something more solid than my own Radar.

    • Mr McCawber
      “income 20 shillings expenses 20s 6p result misery
      income 20 shillings expenses 19s 6p result happiness.” (close enough quote!!)

      DJ Propaganda Index was coined by Andy Hoffman of Miles Franklin
      http://www.milesfranklin.com/

      It is documented by various sources that the Dow Jones Index is Manipulated by the The working Group on Financial markets by buying shares using money from the Fed et al. TWGOFM was formed in the 1980′s after a 450 crash in a day , by Reagan, to prevent loss of confidence in the markets. It now operates daily and results in the DOW making “hail Mary” recoveries in the last hour of trading over and over.

      I saw reported that the majority the share purchases are now by the working group (aka the Plunge Protection Team) and that the actual market is very thinly traded by actual investors.

      As large funds invest on momentum trades the manipulation only needs to move the market enough to trigger the algorithms of the computers of the funds. And bingo the trend established continues by momentum and the PPT can recover their investment by selling again. Mission accomplished.

      Review http://www.gata.org they have 15 years of reports on the precious metals markets where the same is done in reverse so as to keep the gold and silver prices under wraps. This is to protect the fiat currency regimes and pretend our money system is sound by denigrating the only really sound money mankind has ever possessed.

      We do not live in a real world. All is propaganda. Any journalist going near this stands to lose his job. Probably why McWilliams refuses to go near this topic.

      Thus there is no real market, just a manipulated mirage trying to leave the impression that all is well.

    • StephenKenny

      As well as their operation, what’s interesting to me is why we’ve all developed these sorts of ‘radars’. For myself, I look for ‘indicators’ e.g. Warren Buffet being offered, and buying, several $Billion in Goldman Sachs shares at a massive discount, in 2008.

      The reason that we’ve all done this, and seem to rely almost exclusively on them, as far as I can see, is that all the previous indicators we used – interest rates, FX, markets, financial results, government stats – are, to all intents and purposes, completely broken and unreliable. Wherever they come from, it’s not from a free market.

      Something i heard recently was a delightful example. The brother of a friend of mine works in the jewellery business, and they’re having an increasing problem getting the various qualities of gold for jewellery. It seems that there simply isn’t enough gold out there – they have the demand, and are already paying 25%-50% over the market price to dealers to get it, but it just isn’t there. It seems this is a global problem (it’s a very global industry). At the same time, the gold mining industry is shutting down mines due to it being ‘uneconomic’ to mine the stuff.

      This simply isn’t how free market work.

      Another is that farmland prices in the US midwest are now such that it is not even faintly economic to buy farmland for farming.

      Interesting times.

      • Absolutely correct Stephen. We live in Orwellian times. White is black, up is down, in is out etc.

        Your example of gold scarcity is produced by the price being set on the COMEX by paper derivatives. It is reliably reported that there is only one ounce of gold available for delivery for every 100 ounces contracted.
        how is this so? one might ask. The comex is become a gamblers den where the price of gold is bet on and settlement made in cash rather than kind. TPTB use bare naked shorts (they sell gold that they do not own . It is a fraudulent practice but the regulators look with a blind eye and can find no wrong) to drive the price down.

        The physical market you mention, where your brother’s friend pays 25% higher prices to source the physical, will eventually overcome the paper market place. In the meantime it is all lies and deceit. Out and out fraud.

        The Chinese have set up the Shanghai gold exchange which deals only in physical gold. Buyers and sellers must be able to deliver the physical. This exchange not outpaces all others and is where the chinese access over 2000 tonnes a year to add to there stash. However they pay only the low artificial paper price. This is the deal of the century for them and the Indians and Russians etc and the stupidity of the western central banks who have sold, leased or other wise hypothecated their gold supplies.

        The reason that many western nations cannot repatriate their gold holdings is because, lightly,the gold is no longer there. The holdings of the Federal reserve have not been audited since the 1950′s.

        Lies and deceit rule the roost in the Western world while the East scoop the bargains.

        Devilish tricky these Chinese , it is said. Good on them I say.

        As an aside. The US Mint has suspended sales of silver eagles as it cannot source the silver. This is the third time I recall. The Canadian mint has the similar problem for production of Maple Leafs

        Soon there will be no precious metals available at any price as there will be simply no sellers and no metal available. That is what happens when the price discovery mechanism of the market place is destroyed by manipulation and corruption

  12. Grzegorz

    http://www.caseyresearch.com/articles/this-living-legend-just-called-the-bottom-in-commodities

    Half way down
    ” The crash of one commodity is hurting Canada most…

    Canadian stocks are falling.

    The S&P/TSX Composite, Canada’s main stock exchange, is down 3.5% in 2015. It’s declined 7.8% since hitting a yearly high in April. And it recently fell for seven straight days… its worst losing streak since 2011.

    Oil prices are 52% lower than they were a year ago. This is a big problem for Canada. Canada is the world’s fifth-largest oil producer. Crude oil is its biggest export. It makes up 27% of Canada’s total exports.

    The Financial Post explained, “(I)t has become increasingly clear that the collapse in oil prices is doing much more damage to the Canadian economy than initially predicted.”

    • joe sod

      well i criticised others for going off topic and now im doing it myself. I think there is something fishy also in the oil market. If you look at the oil price chart since 1970 there has never been 50%+ drop in price in such a short time. There is only 1.5 million barrel or so surplus supply, global demand is circa 92 million barrels per day. Even inconsequential news is having dramatic effect on price. It seems the markets are betting one way on the price and seem to have a lot of confidence in that bet. The question is are they being tipped off and acting in concert with the big players confident that those players wont spring a surprise on them. Is the whole thing being orchestrated to damage Russia even if US shale gets hobbled in the process.

      • McCawber

        We have reached peak demand for oil perhaps.
        Gas has replaced Oil as the major source of Electrical energy and Renewable energy production is increasing all the time and the sky is the limit barring one main bugbear. The bugbear being economic electrical energy storage.
        The Oil companies are sweating their assets, getting the oil out of the ground now because in less than 40 years time oil use will be no more.
        There are massive amounts of money being poured into solar energy and electrical storage research.
        And there is the Nuclear Fusion long shot which I wouldn’t bet against given the massive advances in virtually all fields of research but in particular materials.
        Underpinning all the above changes is the imperative to slow or halt global warming.
        So demand for oil is going to drop and that has to be (and is) impacting on price.
        I haven’t forgotten coal or possibly sequestration but just wanted to keep it simple.

        • joe sod

          Maybe but I doubt it. The renewables industry is really just a book keeping and accounting exercise. The demand for hydrocarbons is increasing all the time and this will increase with the lower prices now.I read an artice by Bill Gates recently and he says that current renewables technology is still decades away from having any impact. He says the subsidies to the current renewables industry should be stopped and all that money and much more should be invested in research to a possible future break through. He says there is no current battery technology now or in the next 20 years that has any hope of making an impact on storing renewable energy. This is the big road block now with renewables. However in the oil industry there has been a huge breakthrough with fracking and horizontal drilling. However this oil is only available at high oil prices. Now there is a blip as the shale oil producers are producing now at a loss hoping that the price will recover in time. If not they will shut down their wells and stop drilling and it will take a few years to get them back on line.

  13. http://campaign.r20.constantcontact.com/render?ca=bd774219-0871-41b0-9f05-aaa6ae6edf5b&c=877a32b0-427b-11e3-ad08-d4ae52a45a09&ch=8905dbc0-427b-11e3-ad3c-d4ae52a45a09

    The latest from Miles Franklin is provided for those prepared to read an hour and receive a good look at the real economy. The US is in a continuing downturn, The Fed will be unable to raise rates. China may be forced to liquidate US treasuries.
    Who will buy them? To prevent a precipitous decline in the US dollar and a spike in interest rates the Fed will again buy Treasuries to maintain, a little longer, the illusion that all is well.

    There is no place to hide. Be prepared. Protect yourself.

  14. When are you going to get this message lodged in your brain and fully taken to heart.

    No Sovereignty Without Control Over Currency and Credit–Ellen Brown

    http://www.counterpunch.org/2015/07/31/the-greek-coup-liquidity-as-a-weapon-of-coercion/

  15. It is amply clear that the Greek government has a duty to recover national and democratic sovereignty over all departments of state, and in particular those of the Finance Ministry. If it does not, it will continue to forfeit the instruments of policy making that voters expect it to utilise in pursuit of the mandate they bestowed upon it.–Yanis Varoufakis

    http://www.counterpunch.org/2015/07/31/the-greek-coup-liquidity-as-a-weapon-of-coercion/

    He seems to be saying the same thing. Control of the finance ministry has to be the control of a national currency. That is currency issued by Treasury and not the central bank.
    Currency issued backed by national assets and not issued as a debt based loan at interest. A currency that will eliminate the national debt and associated interest payments. A currency that then allows the government books to be balanced and the income tax act to be repealed.

    I have made that statement several times. It has never been challenged or even commented upon. Can you not see the logic or is the concept so simple as to be unbelievable.

    It seems a simple step in logic that a banking system that can control a government and a people and force them to bankruptcy and austerity needs to be rid off. It also is true that the politician who tries will be assinated or accused of treason.

    • McCawber

      One man’s Austerity is another man’s Prudence (or self restraint).
      It seems to me that Germany has become and remained an economic powerhouse because it has been Prudent.
      Any nation can regain it’s sovereignty if it is prepared to fight for it and make the necessary sacrifices.
      If it is not prepared to that then it does not have the courage of it’s convictions and will fail.

      • Germany has retained de facto control of the money system. But it too will one day find out that the ECB can withhold credit to the commercial banks and hold the country to ransom overnight.

        They aught to know as that was what Hitler did to every invaded country. All productive effort was commandeered to the German war effort and it was done by command of the money system.

        No matter what else is tried or suggested the glaring fact remains that the loss of a national currency is a loss of sovereignty. Period. No sacrifice to seize the currency but it requires courage of the correct conviction. All else is in vane.

    • McCawber

      And yet despite Varoufakis’ rhetoric the Greeks don’t want to ditch the Euro and re-introduce the Drachma so it’s all just talk with no conviction.
      Tsipras and his party should put it up to the Greek people when they call the election.
      Vote us back into power and we’ll re-introduce the Drachma otherwise stop moaning and accept the prudent budgeting measures necessary to restore the countries finances and give us back our sovereignty.

  16. External bail-out monitors have not been in the ground in Athens since last year. Their presence – as decreed by creditors as part of a new rescue package – has been accompanied by a heavy security entourage. More than 250 police officers have been deployed to guard the central Athens Hilton hotel where bail-out officials are based.”"

    http://www.telegraph.co.uk/finance/economics/11769089/Yanis-Varoufakis-facing-criminal-prosecution-over-Plan-B-as-Troika-deny-allegations-they-control-Greek-tax-system.html

    The troika are so popular that only 250 security guards are required and not 500!!

  17. DB4545

    As Sydney house prices are hitting the 1 million average an Irish Australian businessman Seamus Walsh has recently bought Waterford Castle for 6 million Euro and is apparently on the hunt for other property plays in Ireland. It’s knowing when to hold them and knowing when to fold them. It might be time to fold them down under. Watch the wild geese return from Canada and Australia with hard earned cash and kick start another bubble to profit the usual suspects waiting in the long grass.

  18. Vancouver RE market. Huffing and puffing by politicians who can suggest nothing other than to tax the “rich” to subsidize the poor. Nobody suggest changing the money system to produce equity.

    http://www.huffingtonpost.ca/gregor-robertson/vancouver-housing-tax-mayor_b_7512556.html

    • Deco

      Vancouver is a beautiful city. It is worthy of all the accolades. However, even Vancouver can be undermined by politicians seeking to buy votes with the money of others.

      The question will arise – does Vancouver have anything else except housing as an economic engine. Perhaps housing has caused such mal-investment that the rest of the economy affected adversely.

      Be careful. That was exactly what happened in Ireland.

      • Vancouver area has 50& of the population of BC. It is the industrial and commercial center of Western Canada. It also sits on the doorstep of world class skiing, sailing and golf. All done in the same day if you wish. (no skiing in high summer!!)

        Chinese investment in the high end RE caused a trickledown effect through the housing market. That is felt in Victoria too as people from all over the country retire here for the climate.
        Many others work here who are not required to be desk bound. IT, Authors, broadcasters, Musicians, artists, etc. Tourism is strong too, as is destination cruising.

        Much as were would like to pull up the drawbridge we have a constant influx of people. Even Victoria is too big for me. When I am in a traffic jam, have a perpetual stream of traffic lights and must pay for parking even for ten minutes I have had it. Not to mention the police cars in marked and ever increasing unmarked cars waiting to ticket minor infractions. The state owned insurance company, ICBC, pays police to patrol and fine people, allegedly, as it reduces accidents and saves them insurance claims. RIGHT!!

        Saltspring has 10,000 people (18,000 in the summer) and has enough services to be civilized. Police, fire, ambulance, hospital, medivac by helicopter for the heart attacks, stores local artisans, artists , music, cable tv , internet (just), farmers etc. Even a sailing club! Hundreds of clubs and associations too. Not a traffic light on the Island either. Hitch hiking is a legit way of transit and we have a bus service to the ferry terminal, plus three airlines in the harbour with 20 flights a day in and out to wherever.

        Need I say it is a nice place to live if one reconciles the necessity for a ferry trip “in to town” now and then.

        • “Much as were would like to pull up the drawbridge we have a constant influx of people.”

          That’s not very nice of you Tony – it evokes the current British attitude towards the immigrants at Calais and beyond. The British authorities will blame anyone but themselves for what goes on in the world.

          Of course 800 years of colonial rape and pillage on a global scale, not to mention multiple recent brutal invasions and merciless bombing campaigns have nothing to do with the current tragedies washing up on Britain’s shores. You reap what you sow, that’s all I’m saying.

          You’re damn lucky Canada didn’t pull the drawbridge up on you before you even got there Tony, not to mention Ireland on your frequent and welcome visits (hope to see you soon),

          Good luck in the new place Tony, delighted to hear about it. I’ll pop in to visit one day soon.

          • My house is always open for a visitor, Adam , but I would not expect you to move in, take over, feed you, and leave me destitute.

            All is a matter of balance. One can express feelings honestly and then still do the right thing Adam. Most people are so politically correct you do not know what they actually believe. Their actions change with the wind.

          • I look forward to a visit from you, Adam, or anyone else if we can accommodate. Feel free to mark me down as a place to Drop In. Just mention the blog and the door will open.

          • Tony, if I was in Ghana in 1790 I wouldn’t ‘expect you’ to kill my kids, rape my wife and put me on a coffin ship through the Door of No Return to be a slave in a strange land.

            https://en.wikipedia.org/wiki/House_of_Slaves_(Gor%C3%A9e)

            You’re having a laugh Tony going on about the corrupt money system (you’re right about it) but still wanting to put up fences (‘pull up the drawbridge’) to protect your ‘sovereign’ homestead.

            Be forewarned Tony, if the shit hits the fan like you are predicting, I’m not coming to trade little bits of useless metal with you – I’m coming to kill your kids, rape your wife and put you into slavery – and if you are no good at that – well I am going to eat if you I’m hungry.

            At least I’m honest about it. In the meantime we can be friends.

          • And with that in mind – GO ON THE LADS IN CALAIS, every time one of them makes it across the channel, a little piece of my heart is warmed up #wearenotanimals

          • Theme of the day:

            Hypocrisy

            You can’t have your cake and eat it.

            But you can try.

          • You have a nasty streak in you Adam that is quite despicable. It is obvious that with the frame of mind you express that you can never be trusted not to take advantage. Beware of your friendly neighbour folks, he is not here to help but to destroy you if he sees fit. It is the story of mankind.

          • Exactly Tony, you have just confirmed my point.

            Difference between you and me though is I would be and have been far more friendly to ‘immigrants’ that you would ever be.

            Just last night I shared a lovely conversation in the No Name Bar in Central Dublin with a young man from Sudan (who came here ‘illegally’) who is making a life for himself (with some success) in Ireland. I didn’t run off to tell the cops like a lot of the hypocritical good two shoesers on this blog might. Most of you lot wouldn’t give him the time of day in the first place.

            You won’t find me behind a ‘sovereign’ fence beating them over the head with bits of useless metal. You are far more of an ‘I’m alright Jack’ than I am Tony, it’s just that I’m brutally honest and that’s hard for people to hear.

            Don’t forget we are all ‘immigrants’ if you go back far enough. The word ‘immigrant’ is in itself despicable.

            I wish you all the best Tony.

          • Adam,you have accused me of a position that is incorrect in your assumption. You take a position of righteousness for yourself which is as opinionated as any preacher on morality.

            Get off your perch and come scratch with the rest of the chickens. You have the same fleas as the rest of the flock.

            You have no idea how I have lived my life or whom I have associated with in order to make the judgements you have. You are libelous not brutally honest.

          • You said it yourself Tony – “pull up the drawbridge”.

          • No I did not Adam. Read the quote again. You inferred what I said but you are incorrect.

            “Much as we(re) would like to pull up the drawbridge we have a constant influx of people.”

            Much as I would like to punch you in the side of the head to knock some sense into you I would not do it or advocate it.

            Much as I would like to cruise around the world in the lap of luxury I will not do it.

            Much as I would like another beer I will decline it.

            Life is about what is happening. Sometimes we lead the good life and do not want to be disturbed. But as a libertarian I believe in equal opportunity. If I have the right to do something I will not deny someone else that right.

            But if the horseman of the apocalypse rides over the hill he will be fought off if possible. If the newcomer denies me the right I have offered to them then they will be rebuffed.

            The thinking process arrives at many scenarios but only a few are acted upon.

            So Adam do not ascribe actions to me that are merely thought preferences often outweighed by other decisions that are more preferential for various reasons.

            The fact remains that most people who arrive in Victoria wish they could pull up the drawbridge. It is a common reflection expressed here over the last 45 years of my occupancy by oldtimers or newcomers.

        • DB4545

          Adam Byrne

          Adam I was an immigrant in different circumstances so I have some understanding of the possible mindsets of the people in Calais. I absolutely admire the ingenuity and tenacity that has taken them from dire situations to a slightly less dire situation at the moment. Those skills harnessed positively can add to a society. But remember Adam that they’re in Europe. Why have they not decided to settle in France? What’s the motivation driving them to get to a particular location in Europe? If that motivation is welfare shopping I don’t think they’re going to contribute a great deal to any destination they have in mind. If those welfare resources are diluted to a significant degree there will be a backlash. The Netherlands is moving from liberal welfare State to the right with people like Geert Wilders. They’ve had enough.That’s the history of Europe. It’s a dark history and it’s a very unpleasant history. I hope we can learn from it but we may be destined to repeat it.

          • Apparently, from reports I have read and seen, plenty of the immigrants have indeed settled in other countries after arriving on Meditteranan shores. Calais is just the tip of the iceberg.

            Britain needs to take its fair share and stop blaming everyone else. After all, their geo-political and militaristic actions going back centuries (and recently too) have largely contribute to this humanitarian disaster.

          • DB4545

            Adam

            So why would you endure those filthy and dangerous conditions if you’re already in mainland Europe and if those other locations gave you better options? In the absence of evidence to the contrary they’re chasing welfare Adam. We (I mean Ireland) get a relatively free lunch from the Anglo/American/Nato security umbrella.For all our complaining what sort of an economy or access to markets or standard of living would we have without the cover of that umbrella?

          • There’s various reasons, some of them have family already in the UK. It’s also easier to work illegally there (no ID cards) etc. No doubt the welfare situation plays a part too – in that case the British should reform it. I don’t agree with giving people cash for nothing but I’ve nothing against people trying to work to feed their families.

            I’ve been an immigrant many times myself. The UK, Isle of Man, Hungary, Australia, Dominica, Antigua, and the USA – I’ve often started a job without the proper documentation and then sorted it out at a later date, or in some cases not at all. I didn’t have anyone putting fences up and referring to me as part of a ‘swarm’. Pure racism. Laws are there to be challenged and changed in my view, not obeyed blindly. . In fact I have been treated very well in every single country I have ever lived in. All men are created equal, that’s what I believe.

            There’s a chap on BBC News right now as I type – Bashar from Syria – wants to go to the UK to be with his brother and sister – these unfortunates are people – not dogs. If the British authorities could get away with shooting the lot of them, they’d do it tomorrow.

          • It’s a great distraction from inequality in society to focus on these ‘parasitic’ economic migrants and castigate them for trying to get ‘free money’ off the UK welfare system or taking the lowest paid jobs of ‘legal’ workers.

            Of course the real parasites in society – the corporations, banks, politicians and elites etc. can carry on getting away with murder, literally in some cases, in their insatiable and unbridled greed for power, wealth and influence.

            There’s literally no need for zero-hour contracts for example in a developed society but the corporations will never give that up and their politican buddies are not going to bite off the hand that feeds them either. If people were paid properly and obscene profits were shared in some form or other rather than going to executive pay or left sitting in a bank vault (e.g. Apple cash reserves = $178 billion) then the need for a welfare state would be much reduced. The amount of money these migrants cost is meagre by comparison but it’s a great sideshow for Fortress Britain.

          • DB, as I said, thousands have indeed stayed in other countries in Europe.

            http://news.yahoo.com/numbers-europe-immigration-crisis-134945927.html

          • DB4545

            Adam Byrne

            People on this blog have discussed at length the private parasitic entities feeding off the wealth generated by taxpayers through crony capitalism or more accurately corporate communism. I’m one of them. We have no argument. The Calais situation is both a distraction but very real.How long before desperate people decide to take AK47s with them in the boats to Europe to increase their chances of success? That tunnel is one of our commercial arteries to and from Europe. Therefore it’s of vital interest to our economy. Our exports run through it and our supermarkets are stocked from it. A back story to this may be the introduction of National ID cards in Ireland and the UK.

  19. http://investmentresearchdynamics.com/

    Spend 3 hours on these two videos and the article and absorb. Then you begin to understand the manipulation and graft and corruption in place world wide.

    You’ll know the dollar is about to die when rises, rises and rises some more, because it’s soon going to vanish…the dollar and Treasuries will suffer a vanishing act from global rejection because foreign nations are going to say we don’t want your stinking toilet paper called “Treasury Bills” – we want something better. – Jim Willie on Shadow of Truth

  20. Just the facts, Ma’am, nothing but the facts.

    http://www.gata.org/node/15608

  21. McCawber

    I honestly don’t think that a country needs to have its own currency to prosper but assuming I’m wrong then it raises another issue.
    Whither BITCOIN – Is this the Armageddon Currency?
    TBH I don’t understand the concept and I don’t trust the technology it’s based on (Encrypted Something is the best I can come up with) and I can’t see any intrinsic value in it.

    • StephenKenny

      Bitcoin has a number of features of a currency (store of value, means of exchange, etc), and it’s immune for monetary expansion efforts.
      My problem with it is that it’s integrity relies on strong data encryption, so you can be sure that every government is working hard to crack it, so it can control/manipulate it.

    • The only currency, other than a national one, where a country is in control of monetary policy is hard to find.
      or if the national currency is set up as present as a fiat currency issued and controlled by a central bank that operated independently of government.

      The best way to have a national currency is to have the money issued by treasury at no cost. Central bank issued money is issued as a loan at interest. The more currency issued the more debt there is. The more debt there is the more interest that has to be paid. The interest became unpayable at 8-12 % so was reduced to 6 to 4 to 2 to zero to prevent defaults. Zero interest rate policy nirp is established.

      It is evident that if interest rates are raised at all, even a 10th of one percent there will be defaults. Because of leverage in the banking system of plus/minus 100 to one, think extreme fractional reserve, a default of one dollar creates a credit contraction of 100 dollars in order to balance the books. Behind the scenes we have already bankruptcies taking place springing these kind of problems. That is why central banks have issued trillions in band-aid and why there is nothing left for the real economy which is actually in recession/depression world wide.

      A country that issues its own currency from treasury, free of debt and interest will break the back of the fiat system. That is why Varoufakis is now savagely attacked. Do not be surprised if something happens to him!! I hope not!!.

      The people themselves must revoke the current system. They will do so when educated to the real situation. Then a politician doing the right thing will not be endangered as much.

      Bitcoin is apolitical but a present threat to the fiat regime. I would feel more comfortable if I could withdraw my bitcoin to a debit card and put into my personal wallet. Can that be done?

      The other day to day international currency is silver which to function internationally must be denominated by weight and purity rather than a set fiat monetary value. One will buy by pricing in ounces or fractions thereof of silver. Debit cards can be set up for silver accounts.

      Similar for gold for those bulk items or large purchases.

      We will see what is available and what catches the mood of the peoples.

      • McCawber

        The people will have to accept prudent economic management (Austerity, the name given to it by it’s enemies) in order to revoke the current system.
        I just don’t see that happening.
        But that doesn’t mean we shouldn’t try to make it happen.
        After the Election of course.

        • IMHO prudent economic management starts with reform of the money system as currently practiced. Austerity is not required. It is demanded by bankers as a method of seizing the tangible assets. It is theft via the fraudulent debts imposed by issuance of the money, the money, that is only issued as a debt.

          There is no hope for any people until they understand the current money system and how it is designed to deliberately impoverish and enslave the people. (I do not exaggerate) . Then they will know the source of the economic problems and what to get rid of.

  22. Chux

    Whilst I do think Australian house prices are overvalued especially in Sydney and Melbourne I believe you need to be careful in just relying on broad statistics.

    You need to distinguish between Melbourne / Sydney and the rest of Australia
    In MEL/SYD you need to separate out high rise apartments from traditional 3/4 bed family homes. (Australian families don’t generally live in high rise apartments)
    Then look at the house prices of the middle ring / established suburbs and then compare like for like the prices with areas such as Clontarf, Raheny, Rathgar, Rathmines and once FX rates are taken into account the Aussie properties don’t look so over valued.

    We were recently back in Ireland and were investigating moving back and we quickly discovered the funds from Selling our house in Melbourne wouldn’t get us the same standard house.

    Prices in Australia will fall at some stage but I predict it will be uneven with some parts of the market getting hammered whilst the more desirable suburbs close to the capitals will be much better off.

    • StephenKenny

      A soft landing?

      • DB4545

        Chux and Stephen Kenny

        You’re right and who predicted the soft landing Stephen? What analysis and data sets are your “I predict it will be uneven” based on Chux? What are your historical timelines? 5 years?, 10 years, 30 years? Read Nassim Nicholas Taleb’s “The Black Swan” and “Fooled by Randomness” and then tell me about your predictions. As he explains it’s human nature to create narratives in order to make sense from nonsense. Politicians, the banks and the property porn messiahs made up the narrative on the hoof to make sense of the nonsense and chaos that ensued. Rathgar redbricks dropped 750K from their peak when it went tits up. What do you think will happen in South Yarra, Ringwood, Croydon and even Mt. Dandenong if panic sets in like it did in Ireland? Smart people like the gentleman I mentioned above are diversifying/hedging with real money ie their own money. Then they’ll be back to buy South Yarra when there’s blood on the streets.

        DB

  23. Deco

    Interesting set of statistics.

    Wells Fargo are worth almost as much in market capitalization as the combined stocks in the India Stock Market. That is crazy.

    All the indications are that something dreadful is about to hit the main stock market in Wall Street.

    apart from the overvaluations in the Nasdaq Composite Index.

    • StephenKenny

      Well, those $xx trillion that the US Government has borrowed over the past 8 years must have gone somewhere.

    • McCawber

      I kind of agree with you but like everyone else, I’d like to know when. Most bubbles go on longer than anyone expects.
      In further support of your point:-
      Facts first
      1. The FED stopped printing money last year, following which the $ strengthened and the € weakened.
      2. The ECB only started printing money this year and we had all the Greek drama.
      3. The FED is “hoping” to raise interest rates in the Fall.

      The above indicates a weaker Euro and yet it hasn’t really budged much this year (1.20 at start of year).
      The Euro should be below parity at this stage so why isn’t?
      And that gentlemen and gentlewomen is the question.
      Is it simply a matter of the next “debt ceiling” debate? in the USA that will be the trigger.
      Would anyone care to list five of the most likely triggers?
      Is Greece leaving the EZ one of them?

      • StephenKenny

        The currency rates are not really a reliable indicator. Global central banks have repeatedly announced that they are intervening in each other’s markets, and certainly in the FX & bond markets. After all, that’s how they’re holding down interest rates.

        The BOJ recently reported that it had intervened on a massive scale join support of the S&P 500, a year or two ago.

        Rather than fixing the economies, which would be reflected in a range of indicators, they’re fixing the indicators, so as to give the impression that the economies are OK. Just to be clear, this isn’t about rigging the rates directly, but by intervening in the markets to produce the desired results.

        So in response: The FED may not be printing, but they are still borrowing. On top of that, the US consumer is increasing their outstanding borrowings at a considerable rate. Combined US government and consumer debt is rising at about $1tn per year.

        Given the situation, useful indicators are, as you pointed out earlier, difficult to find. Manipulating the markets in this way produces ever greater distortions in the wider economy. The cost of food, in many countries, is getting to the point of being unaffordable to buy, and to produce, which is a clear distortion (resulting from incorrect exchange rates and commodity prices). So one would be to look at the news for real world effects of this sort – things that don’t make any sense.

        The Greek (and then Spain, Portugal, UK, Ireland, France etc) problem is really about giving a clear and umanipulated view of ‘debts against real life’. If this is allowed to go ahead, everyone will immediately see the effect of debt on real economies, and will be able to measure it. We will then be able to look at ourselves and calculate the scale of the problem, and it’s forthcoming effects. All those years of market intervention would have gone for nothing.

  24. McCawber

    The value to a country of having its’ own currency is diminishing IMHO.
    Look at the arguments people have put forward regarding gold.
    There is more gold traded than exists (If I have understood people correctly). So sure the Chinese hold a lot of the real stuff but what good will it do them if the US and/or Europe economies go belly up.
    They may well be playing a long game but there’s going to be plenty of hardship in there for everyone.
    And as I see it the bottom line is going to result in some serious public unrest.
    Chaos is certainly a major possiblity.
    So given the above what are the practical solutions.
    Joking aside but Mr McCawber is a lot closer to the answer than anything I’ve heard recently.
    Anyway hope you all enjoy the Bank Holiday.

    • StephenKenny

      For a lot of people who’ve been here a while, you’re talking to the choir – and are quite right, as far as I can judge.

      On gold, the derivatives market and the bullion market will simply split into two. We’ll have two prices – the cost of gold bullion to buy/sell, and the cost of a gold derivatives contract. It won’t last, because it’s actually absurd, but it will happen before it goes away. After all the mess is cleared up, gold will still be there, as the ultimate fall back in pricing currency transactions.

  25. In the not too distant past I have talked of the Real Bills Doctrine as a method of conducting business when there is little credit or money available. It is the essence of conducting business and trade over a 91 day period that is self liquidating by payment in cash of the consumer to buy the finished product.

    Please read this explanation by Hugo Salinas Price. Also available is a reference to Antal Fekete an expert on this issue.

    http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=263

    A country with its own asset based non debt currency can employ the Real Bills Doctrine and be prosperous.

  26. Deco

    Grzegorz,

    Thanks for the link on the Danish Philosopher Kirkegaard. Rather interesting perspective on the centralization of cultural and intellectual control, and the real battle in each individual.

    It also gave a series of useful links to other philosophers.

  27. McCawber

    On the whole currency thing, sovereignty and control.
    It might have been true once but now you have spread betting, shorting, CFDs, highly leveraged trading and internet access to trade your currency from all over the world more or less instantly.
    So you’ve already lost most of the sovereignty your currency gives you.
    Why else are the UK’s, ECBs and FED’s interests so similar?
    Real sovereignty comes from having a well managed economy.
    Those countries whose economies are in bad shape are that way because of the way their politicians have managed those economies.
    CBs can, as Mr Draghi has repeatedly and pointedly said, only buy time for the politicians to fix their economies.
    Bernanke also regularly made the same point.

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