Uncovering covered bonds
Uncovering covered bonds

The proposed government changes to the financial services are terrible policy. They will increase the weight of money going into housing compared to what would otherwise be the case. This effect may not manifest itself immediately, but it will when a bubble next gets going. Investment banks will get fees structuring products, some lucky people will exit the market at the right time (turning points are not predictable, so the best timing will result from luck). Most will find themselves in a similar spot to Americans, but without the option of sending in the keys. They will enter bankruptcy or spend much of the rest of their life with a crushing debt load. Nice.

Politically it could delay the Australian downturn. There is a lot of money in superannuation and it could replace Chinese demand for our housing. Because the super investments will be going into unproductive assets, the economy will not generate sufficient wealth for the retired people to live the life they are expecting, as per America. No matter what nominal balances may suggest in the interim. Super should go toward digging holes, growing or processing things. It would be nice if we could make something as well. We will not be a wealthy country on the back of flipping houses to each other, no matter how high a proportion of each flip is captured by the financial sector.

Of course on the political side, if they can’t inflate housing enough to counteract the effects of the Chinese purchase slow down, they are gone. It’s a bit like Bush kicking the can down the road. But at some point the debt burden gets too big. I’d rather our government learnt the lessons from around the world, rather than repeating them. Thus far we avoided covered bonds, no longer. When things get messy, they will be very messy. And they will get messy. Can’t predict exactly when, and how horrible it is partly depends on what we do between now and then. This is the opposite of what we should do. It is standing at the bottom of a hole and deciding to dig madly rather than climb.

The government solutions are destined to fail because they bring the wrong conceptual framework to the problem. They are too influenced by Keynesian economics. They discount the fact that we have endured a credit expansion induced bubble in multiple asset classes. The excess debt created has to be cleared, as does the mal-investment associated with the boom:

When there is a credit-inflated boom that results in your working at a job in which you produce goods that no one wants, needs, or can obtain financing to buy, and which your employer consequently cannot sell, it naturally follows that neither you nor your co-workers are going to be employed in the near future”. Source Vox Day cited in Why Keynesians and Krugman are Wrong

The Australian experience may yet come to reflect that of America:

(US 2005) Full employment was accompanied not only by an unsustainable external deficit, but also unsustainable asset prices, private debt levels and levels of consumption (and savings) relative to income as well as higher public debt levels. When the public’s willingness to increase its debt load waned as real estate prices fell, consumption, economic activity and employment fell along with it. We are now experiencing balance sheet recession and existing debt levels appear to be a barrier to increased private and public sector debt-financed demand.

Most troubling, but not surprising, the trade deficit is growing again and is unsustainable at about 3.7% of GDP. The external imbalance is not a temporary phenomenon. The simple and sad fact is that an unsustainable trade deficit implies that full employment levels of GDP are also unsustainable”. Source: Richard Alford cited in Why US stimulus can’t fix unemployment

Analysis demonstrating the beneficial effects of government stimulus’s are flawed. The models can’t fail but to attribute growth in GDP to them:

“If government spends a dollar; this will always be shown as contributing to GDP in the period it is spent. And, it would be shown this way even if the whole dollar were spent on imports and did not, in fact, contribute to GDP… If the government spends taxpayers’ money to build, say, a school library, at a reasonable cost, this will be shown dollar for dollar as contributing to GDP. If the same library were built at an inflated cost, this would be shown dollar for dollar as contributing to GDP. If the same library were then immediately demolished at government expense even more would be added to GDP. And this is not the end of the matter. If government takes resources away from the private sector to build a school library, this will be recorded, and probably written up, as the economy being saved from a decline in private sector activity by government spending” Source: Peter Smith cited in Keynesians are so wrong

Thanks to Chinese demand for Australian commodities Australia had the chance of a gentle landing. Almost everything economically significant that I can think of that the Government has done will make the economic downturn worse. Thank you Mr Rudd, Ms Gillard and the media sycophants who played a part in their election.

  1. 792007 88467I feel this internet site has got some quite exceptional information for every person : D. 322277

  2. 830977 331918What is your most noted accomplishment. They could want very good listeners rather than very good talkers. 778141

  3. 966082 103802Thanks for sharing superb informations. Your website is so cool. 251494

  4. 622430 815634really good post, i undoubtedly adore this wonderful web site, carry on it 390529

  5. 241145 918220Completely composed content material , thankyou for info . 814742

  6. 930334 296401Hello! I just wish to give a huge thumbs up for the excellent information youve gotten proper here on this post. I will likely be coming back to your weblog for a lot more soon. 507597

  7. 830224 913075The book is fantastic, but this review is not exactly spot-on. Being a Superhero is much more about selecting foods that heal your body, not just eating meat/dairy-free. Processed foods like those mentioned in this review arent what Alicia is trying to promote. In the event you arent open to sea vegetables (and yes, Im talking sea weed), just stop at vegan. 435586

  8. 989194 519574Really fighter messages are supposed to amuse offer praise into the groom and bride. First time audio system watching over the top places should also remember you see, the senior guideline of the speaking, which is your particular person. best man speeches brother 638756

  9. 6219 206073I needs to spend a while studying more or working out more. Thank you for great information I used to be looking for this information for my mission. 691124

  10. 520397 997533Trop excitant de mater des femmes lesbiennes en train de se doigter la chatte pour se faire jouir. En plus sur cette bonne petite vid o porno hard de lesb X les deux jeunes lesbienne sont trop excitantes et super sexy. Des pures beaut de la nature avec des courbes parfaites, les filles c est quand v 47504

  11. 264350 141057It is truly a cool and beneficial piece of details. Im glad which you shared this beneficial information with us. Please maintain us informed like this. Thanks for sharing. 709813

  12. 909613 538987The luxury proposed may be incomparable; citizens are never fail to looking for bags is really a Native goals. The concept numerous insert goals uniquely to push diversity with visibility during the travel and leisure arena. Hotels Discounts 876337

  13. I couldn’t refrain from commenting. Exceptionally well written!

  14. whoah this weblog is fantastic i really like reading your posts.

    Keep up the good work! You understand, many people are searching round for this info, you could help them greatly.

  15. Awesome! Its genuinely amazing article, I have got much clear idea on the
    topic of from this post.

  16. Everyone lloves what youu gguys tend to be up too.

    This kind of clever work annd exposure! Keep up thhe fantaastic works guys I’ve added you guys to
    myy ownn blogroll.

  17. What’s up, this weekend is good for me, for the reason that this
    moment i am reading this wonderful educational article here at my residence.

  18. Hi there! Do you know if they make any plugins to safeguard against hackers?
    I’m kinda paranoid about losing everything I’ve worked hard on. Any tips?

  19. Good replies in return of this issue with firm arguments and describing all about that.

  20. I pay a quick visit everyday a few websites and sites to read posts, but this
    weblog provides quality based posts.

  21. If you would like to grow your knowledge simply keep visiting this website and
    be updated with the latest gossip posted here.

  22. Why users still use to read news papers when in this technological globe everything
    is available on net?

  23. Woah! I’m really loving the template/theme of this site. It’s simple, yet effective.
    A lot of times it’s very hard to get that “perfect balance” between usability and visual appeal.
    I must say you have done a awesome job with this.

    Also, the blog loads super quick for me on Safari. Superb Blog!

  24. Asking questions are really pleasant thing if you are not understanding something fully, but this article gives nice understanding yet.

  25. I just like the valuable information you supply for your articles.
    I’ll bookmark your weblog and take a look at again right here frequently.
    I’m quite certain I’ll be told a lot of new
    stuff proper right here! Best of luck for the following!

  26. Its such as you learn my mind! You appear to grasp a lot about
    this, like you wrote the e book in it or something. I believe that
    you just can do with a few % to power the message house a bit, but instead of that, that
    is fantastic blog. A fantastic read. I will certainly be back.

  27. Wow that was odd. I just wrote an extremely long comment but after I clicked submit my comment
    didn’t show up. Grrrr… well I’m not writing all that over again. Anyhow, just
    wanted to say superb blog!

  28. 284866 680200Cpr KIts extremely fantastic read you know alot about this subject i see! 999784

  29. 526780 909299Thank you for the sensible critique. Me and my neighbor were just preparing to do some research on this. We got a grab a book from our area library but I think I learned more clear from this post. Im very glad to see such excellent information being shared freely out there. 229865

  30. Nice post. I learn something new and challenging on blogs I stumbleupon everyday.
    It will always be exciting to read through articles from other
    authors and practice something from their sites.

  31. Hello i am kavin, its my first time to commenting anywhere,
    when i read this piece of writing i thought i could also create comment due to this brilliant

  32. 371559 566932You may uncover effective specific development of any L . a . Weight loss program and each and every you are really critical. To begin with level is an natural misplacing during the too considerably weight. shed belly fat 853085

  33. Thank you a bunch for sharing this with all people you actually recognise what
    you’re speaking about! Bookmarked. Kindly additionally discuss with
    my web site =). We could have a hyperlink exchange contract among

    My homepage; offshore incorporation

  34. 957276 413714so considerably amazing data on here, : D. 254433

  35. It’s awesome to visit this site and reading the views of all mates regarding this
    piece of writing, while I am also eager of getting familiarity.

  36. I’ve read several just right stuff here. Definitely worth bookmarking for revisiting.
    I surprise how much attempt you place to create this sort
    of wonderful informative website.

  37. I know this if off topic but I’m looking into starting my own weblog and was curious
    what all is needed to get set up? I’m assuming having a blog like yours would cost a pretty penny?
    I’m not very web savvy so I’m not 100% sure.
    Any recommendations or advice would be greatly appreciated.

  38. Hey! Do you use Twitter? I’d like to follow you if that would be ok.
    I’m undoubtedly enjoying your blog and look forward to new updates.

  39. 311979 766422For anybody who is considering about external complications, sometimes be tough amaze those to realize to produce just a single weed in this extremely flowing generally requires eleven liters concerning gasoline to. dc totally free mommy blog giveaways family trip home gardening house power wash baby laundry detergent 127137

  40. Every weekend i used to pay a visit this website, because i want enjoyment,
    since this this web site conations truly pleasant funny
    stuff too.

  41. 222596 906588You completed a number of nice points there. I did a search on the issue and found nearly all people will have the same opinion with your blog. 276659

  42. Hiya very cool site!! Man .. Excellent .. Superb .. I will bookmark your site and take the feeds also?
    I’m satisfied to find numerous helpful information here within the post,
    we want work out more strategies in this regard, thank you for
    sharing. . . . . .

  43. Contrary to popular belief, commercially available ID scanners do not run the
    license number against the official state database for authenticity.
    Other critics though argue the shanzhai market for everything fake is damaging
    Chinas reputation to effectively trade on world markets, as consumers become reluctant to
    source products manufactured in China, due to concerns about fake goods, and lack
    of warranties. It is much easier to coax information out of a victim if the
    phisher can relate to them using information they took off the victim’s profile.

  44. Hey I am so happy I found your blog page, I really
    found you by error, while I was looking on Aol for something else, Anyhow
    I am here now and would just like to say thanks a lot for a remarkable post and
    a all round exciting blog (I also love the theme/design), I don’t have time
    to look over it all at the moment but I have book-marked it and also included your RSS
    feeds, so when I have time I will be back
    to read a lot more, Please do keep up the fantastic work.

    Check out my web-site :: seo

  45. 832640 799476I gotta bookmark this internet site it seems quite beneficial . 351924

  46. 756019 231701I was suggested this blog by way of my cousin. Im no longer sure whether or not this put up is written by him as nobody else realize such detailed about my trouble. Youre wonderful! Thanks! 262295

  47. Results from the use of the items incorporated in the Sexual Wellness Program will range by personal.

  48. I simply could not go away your web site before suggesting
    that I really loved the standard information a person provide for your visitors?
    Is going to be back steadily to inspect new posts

  49. The other day, while I was at work, my sister stole my iPad and tested to see if it can survive a thirty foot drop, just
    so she can be a youtube sensation. My iPad is
    now broken and she has 83 views. I know this is entirely off topic but I had to share it with someone!

    My blog … internet marketing

  50. Hello there! This is my first visit to your blog! We are a group of volunteers and starting a new
    initiative in a community in the same niche. Your blog provided us beneficial information to work
    on. You have done a wonderful job!

  51. My partner and I stumbled over here from a different web
    page and thought I should check things out. I like what I see so
    i am just following you. Look forward to looking over your web
    page repeatedly.

  52. Very quickly this web page will be famous amid
    all blogging users, due to it’s pleasant posts

  53. What a stuff of un-ambiguity and preserveness of precious know-how regarding unpredicted feelings.

    Feel free to surf to my web-site … fat cells (Vonnie)

  54. Very nice post. I just stumbled upon your blog and wanted to mention that
    I’ve really loved browsing your weblog posts. After
    all I’ll be subscribing on your rss feed and I hope you write once more very soon!

    My blog: garcinia cambogia xl (Leonie)

  55. I couldn’t resist commenting. Very well written!

    Feel free to surf to my page; internet marketing

  56. Everything is very open with a clear description of the challenges.

    It was really informative. Your website is very useful.
    Thank you for sharing!

    Feel free to surf to my blog post garcinia cambogia vitamin shoppe – Loyd,

  57. Pretty section of content. I just stumbled upon your website and in accession capital to
    assert that I get actually enjoyed account your blog posts.
    Any way I’ll be subscribing to your augment and even I achievement you access consistently rapidly.

  58. It’s an awesome article designed for all the web visitors; they will
    obtain advantage from it I am sure.

  59. My partner and I stumbled over here by a different page
    and thought I should check things out. I like what I
    see so i am just following you. Look forward to going over your web page again.

  60. I hav beesn browswing onnline molre than 4 houurs today, yyet I nnever foiund
    anyy interesting article likie yours. It’s prett worthh enough foor me.
    Personally, iff all sit owners andd bloiggers maade good contgent ass yoou did, the internet woll bee a
    loot mote uuseful thqn evcer before. Ahaa, iits fasidious discfussion reggarding this pst aat this pkace
    at ths website, I haqve read alll that, soo att
    this time mee also commentinhg here. Doees your ste have a ontact page?
    I’m having proglems lokcating it but, I’d lioe too sejd youu
    aan email. I’ve got slme reommendations forr your log yoou might bbe interexted
    iin hearing. Eithewr way, greaat website andd I look forard too seeingg iit grrow oveer time.


  61. Heya i am for the first time here. I found this board and I
    find It really useful & it helped me out a lot. I hope
    to give something back and help others like you helped me.

  62. It’s verry straightfoward tto fknd ouut anny topic onn neet aas compaared tto books, aas I found this pos aat
    this site. Heey there! I’ve bren following yyour blog forr a ong timke noow
    andd finalpy ggot thee courage tto ggo ahead and give youu a shut outt frolm Lubbock Texas!

    Justt wanteed too say keeep upp tthe geeat job! Dooes
    yur site ave a coontact page? I’m havng priblems locating it but, I’d like
    tto shoo yyou aan email. I’ve goot some ideas ffor yourr
    log yoou migh be interestted inn hearing. Either way, great blog and I lookk fortward tto seeinng it expand ovedr time.

  63. I love your blog.. very nice colors & theme. Did you make this website
    yourself or did you hire someone to do it for
    you? Plz reply as I’m looking to design my own blog and would like to know where u got this from.


  64. Post writing is ɑlso a excitement, іf you be acquainted աith then you
    can աrite if not іt is difficult to wrіte.

    my site – home repair expenses tax deductible

  65. Hi there every one, here every one is sharing these kinds of familiarity,
    so it’s good to read this weblog, and I used to visit this webpage daily.

    Feel free to visit my page :: garcinia cambogia draw