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Friday, 20 July


From Russia without kid gloves Crispin Hull

WHILE President Trump dissembles over whether he cant see why it would be Russia or why it wouldnt be and prefers Vladimir Putins denial over his own intelligence services, all the evidence points to Russia. First, why, one might ask, would anyone trust the US intelligence services, after the post 9/11 call on Iraqs so-called weapons of mass destruction?

The answer is because they learned a lot from that. President Obamas director of national intelligence, James Clapper, in his book Facts and Fears, says the intelligence community did several things as a result.

First, they made it a rule to always speak truth to power. Second, they vowed not to blur the lines between what is known, what is unknown and what is conjecture. Third, they vowed to avoid policy recommendations and just state the facts. Fourth, and most important, they got their act together and instead of each agency guarding its own turf, they co-operated and shared information.

Clapper did his best to organise a smooth transition after Trump won, but was ignored and rebuffed. In October 2016, before the election, he concluded with damning evidence that the Russians were meddling on Trumps side. The intelligence agencies made that public. Alas, they did so on the very day that Trumps infamous pussy statement came out and it was buried.

Malcolm Nance in his book, The Plot to Destroy Democracy, makes a convincing case that not only did Russia meddle, but it colluded with the Trump campaign in doing so and explains how it was done.

The turning point here is not that Trumps performance at the meeting with Putin in Helsinki will swing many, if any, of his deluded supporters. Rather, it is that he has so inflamed the US intelligence community that it will be galvanised to greater efforts to uncover the truth and speak that truth to power: not to the President, but to the Congress, prosecutors and the judiciary.

Remember, special prosecutor Robert Meuller was director of the FBI for 12 years under both a Republican and Democrat President. It is only a matter of time.

But now to the background and evidence. Vladimir Putin was a KGB agent in the former Soviet Union. In 1987, Ronald Reagan, the President of the US, the Soviet Unions greatest adversary, came to West Berlin and said, Mr Gorbachev, tear down this wall.

The wall came down. The Soviet Union collapsed.

Then one after the other, 10 former Soviet Bloc Warsaw Pact nations and three former Y...



[ Thursday, 2 Aug; 7:00 pm to 9:00 pm. ] Dr. Annette Cowie, Principal Research Scientist and Dr. de la Rosa will discuss their biochar project at the next Sustainable Living Armidale monthly forum on Thursday, 2 August, at 7pm, Kent House Land degradation affects 24% of global land area, with 24 billion tons of fertile soil lost annually. The causes of land degradation include unsustainable [...] full article 


The Weekend Quiz July 21-22, 2018 Bill Mitchell billy blog

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

1. As a matter of accounting, the net financial assets held by the non-government sector rise $-for-$ when a sovereign government issues debt.

2. In a fiat monetary system (for example, US or Australia) with an on-going external deficit that exceeds the public deficit (expressed as percentages of GDP), the private domestic sector cannot reduce its overall debt levels (by overall saving) without incurring employment losses.

3. The imposition of fiscal rules which aim to limit the discretionary capacity of governments to net spend bias fiscal policy towards counter-cyclical responses when private spending is weak.



Business as usual? Pete Wargent Daily Blog

Brokers processing

It's 'business as usual' for the mortgage broking industry reported AFG, the country's largest mortgage aggregator, in its media release yesterday.

Or is it?

Certainly there has been no noticeable impact from tighter lending standards on the average mortgage size, which increased to a record $504,900, up 4.3 per cent from a year earlier (and up from $360,000 at the beginning of the data series in March 2010). 

The main strength here was driven by Victoria and Queensland, and this generally mirrors the monthly housing finance figures reported by the ABS

Volumes have eased, however.

Although lodgement volumes increased seasonally to $14.6 billion in the June 2018 quarter, this was only a moderate increase on the equivalent figure from a year earlier (and indeed, AFG's rapid volume growth now appears to have a slowed since 2015). 

New normal

The composition of lending has changed significantly, too.

Investors now comprise 28 per cent of lodgement volumes, well down from 40 per cent at the 2015 peak. 

And interest-only loans comprise less than a fifth of new loans, way down from 59 (fifty-nine!) per cent at peak popularity in 2015. 

Thus some 81 per cent of new borrowers through AFG brokers are now taking advantage of cheap interest rates to pay down their principal immediately, instead of using buffers and mortgage offsets.

This is a substantial behavioural change, with impacts both for the housing market and the wider economy.  


Decentralized Recruitment Marketplace to Protect Workers From Inflation "IndyWatch Feed Crypto"

An Australian startup has launched the beta of its decentralized marketplace for labor hiring. The company aims to protect workers from inflation and enhance transparency in wages #SPONSORED


The Hidden Trigger for the Next Financial Crisis Daily Reckoning Australia

Market crises are frighteningly regular.

Yet its surprising how few people see them coming.

Thats partly because the triggers for economic crises can come from the most unlikely places.

The Asian Financial Crisis began in 1997 with a Thai land developer defaulting on bonds.

The US subprime crisis in 2007 began with an unknown subsidiary of insurance company AIG in a dingy office in London.

In both cases, the trigger for the market crash was an unremarkable company turning over less than $100 million a year. Yet, though only a small part of a much wider problem, both brought the financial market to its knees.

These two crises happened 10 years apart. And its now been a decade since the last major crisis.

Which means the question of the next crisis isnt a case of if but when and what.

The early warning signs that were due for another crisis are flashing red.

There is roughly $10 trillion in US dollar-denominated loans swimming in emerging markets (EMs).

These loans need to be paid back in greenbacks. And with the Federal Reserve Bank raising rates, it means the interest payable on those loans is only going to rise.

Whats more, meeting these repayments is becoming more difficult. The majority of emerging-market currencies are weakening against the US dollar. In fact, all EM currencies are down on average 5% compared to the US dollar since the start of June.

Take Turkey as an example. Due to a mixture of local policy and too much debt, the Turkish lira has tumbled a whopping 21% against the US dollar.

The weakening lira makes Turkeys $450 billion in US dollar-denominated debt harder to repay. Ever more lira is needed to pay off the loans, which are becoming more expensive as the Fed funds rate rises.

That puts Turkey precariously close to defaulting on its debt.

But is Turkey a likely trigger for a financial crisis? Probably not.

Dont get me wrong; Turkey is facing the prospect of undergoing a localised market crash. President Recep Tayyip Erdogan regularly makes erratic, on-the-fly decisions that are out of step with Western markets. Inflation is high but the currency is weak. In addition, monetary policy is inconsistent, so unpredictable changes are causing the lira to fall further.

Erdogan has ordered the Central Bank of the Republic of Turkey to double its gold holdings this year. Hes also repatriated gold held in the US to a newly-built vault in the countrys capital, Ankara.

In my view, bringing home its gold enables Turkey to default on its US dollar-denominated debt obligations.

Thats a real possibility.

Still, no party benefits if Turkey is allowed to default on its debt. While 59% of Turkeys long-term loans are in US dollars, 34% are in euros.

Germany is one of Turkeys biggest lenders. Erdogan may be hell-bent on ending Turkeys relationship with US dollar-denomi...


Expert study condemns secrecy as RCEP talks resume in Bangkok AFTINET

July 20, 2018: The Jakarta Post reports that an expert study by the Trans National Institute has found that the Regional Comprehensive Economic Partnership trade talks between 16 Asia-Pacific countries* since 2012 have failed transparency and public participation tests.  The international assessment finds there has been a failure to release draft texts, no independent social economic and environmental impact assessments and corporate interests have had privileged access to influence negotiations while members of Parliament and the public do not have such access.

Civil society groups from the region are meeting in Bangkok on the weekend, and have been allowed only a brief meeting with some negotiators on Monday, with no access to draft texts.

The authors argue that, with a global trade war looming and public faith in corporate globalization at an all-time low, secrecy in trade deals cannot be accepted. People have a right to know what is being negotiated in their name.

They contrast the secrecy of trade negotiations with the transparency of other international institutions. The United Nations climate negotiations, The World Health Organizations negotiations on tobacco control and the World Intellectual Property Organization all make submissions from negotiating parties publicly available, with regular meetings open to the public or stakeholders. Even the World Trade Organization publishes most negotiating texts, and reports by committee chairs are available on their websites.

The RCEP potentially covers half of the worlds population, and the authors argue that public opposition to secretive free trade deals is growing. Parliamentarians and the public should have full access to the contents of the negotiations, which potentially impact peoples lives and the environment.

*The RCEP negotiations includeAustralia, New Zealand, Japan,China, India, South Korea, and the 10 ASEAN countries.

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Thursday, 19 July


Canada, Australia, Sweden Significant Price Drop and Sales Tumble! (Video) "IndyWatch Feed Economics"

Canada, Australia, Sweden Significant Price Drop and Sales Tumble! Video The Money GPS Video Source

The post Canada, Australia, Sweden Significant Price Drop and Sales Tumble! (Video) appeared first on The Daily Coin.


PR: trade.Io Appoints Banking Veteran David Hannigan to Run OTC Desk "IndyWatch Feed Crypto"

trade.Io Appoints Banking Veteran David Hannigan to Run OTC Desk

This is a paid press release, which contains forward looking statements, and should be treated as advertising or promotional material. does not endorse nor support this product/service. is not responsible for or liable for any content, accuracy or quality within the press release.

Wednesday Lugano, Switzerland, a leading cryptocurrency exchange and innovator of the industrys leading liquidity pool, today announced that David Hannigan has joined the company as its Chief Dealer. David brings almost 30 years of trading and risk management experience, most notably his position as Senior VP at National Australia Bank, to his new role.

David will lead trade.ios risk management department, and will be responsible for building out its OTC Desk, allowing for both retail and institutional fiat-to-crypto exchange functionality. Up to 50% of all OTC Desk revenues will be allocated to the forthcoming liquidity pool, which can only be accessed by using trade.ios utility token, TIO.

trade.ios CEO Jim Preissler said, Were very lucky to have someone with Davids experience lead the risk management team and spearhead our OTC Desk. David has an impeccable track record in trading and risk management, which is invaluable when dealing with the size of deals in the crypto space. Its not uncommon to have a $10m deal come through the desk multiple times per day.

David Hannigan also commented, I see a lot of similarities in how runs its business to many of the large banks Ive worked for in the past. With my prior experience in the banking sector, I am cognizant on how profitable an OTC Desk can be. I am thrilled to hit the ground running to provide this service to the community.

David will also be providing daily commentary on the crypto markets which can be accessed by registered...


Ghosts of privatisations past and future? John Quiggin

Most people wont recognise the name Leo Hielscher unless they regularly cross the eponymous* bridge (better known by its original name, the Gateway). But he is a figure of great consequence in Queensland, responsible for the downfall of two governments. Hielscher ran the states finances for decades, and was the architect of the Bjelke-Petersen strategy of an extractive economy based low taxes, low services and low skill. His proudest boast was the states AAA credit rating

The low point of his career was probably the leadup to the 2009 election when Anna Bligh announced that, rather than cut infrastructure spending or sell assets in the wake of the Global Financial Crisis, she would allow the states credit rating to be reduced to AA+. Bligh was re-elected, and promptly announced a massive program of asset sales. This was one of the rare instances where I was directly involved in the policy process, providing advice to the Queensland Council of Unions, and in this capacity I got to observe Hielscher in action. He was very effective in pushing the (economically spurious) case for asset sales and the need to regain the AAA rating.

Bligh, and her Treasurer, Andrew Fraser pushed through the asset sales and pushed the Labor government off a cliff, being reduced to seven members at the 2012 election. Of course, Bligh landed on her feet, ending up as CEO of the Australian Bankers Association. I didnt get such a ringside view of the process that led Campbell Newman and Tim Nicholls to adopt their catastrophic Strong Choices asset sales campaign, but I have no doubt that Hielscher played a significant role in the background. Both Campbell and Nicholls have duly been consigned to well-deserved political oblivion.

Now the rightwing Australian Institute of Progress has staged a reunion.

After denouncing the public debt levels sustained by the Palaszczuk Labor government, Hielscher

received a standing ovation from the high-powered audience that included former LNP premier Campbell Newman, former state Liberal leader and treasurer Joan Sheldon as well as former Labor treasurers Keith de Lacy and Andrew Fraser.

Anna Bligh was obviously too busy defending the massive corruption of the banking sector to make it to Brisbane, and Tim Nicholls is still keeping a low profile. Apart from that, though, the whole team was there. De Lacy left politics before the events Ive described, but hes the archetypal  careerist who dumped Labor the moment it had served his purposes. Until now, I was un...


Arrears a little higher Pete Wargent Daily Blog

Arrears a little higher

Prime mortgage arrears remained below their 2011-12 peaks in May 2018 at 1.38 per cent. 

However arrears were a little higher than in May 2017 (1.2 per cent) or May 2016 (1.21 per cent), so this is more than just a seasonal affect. 

90-day prime arrears have moved a bit higher over the past two years.

Arrears have suddenly surged in the Northern Territory to 2.84 per cent, with Western Australia seeing a small improvement in the month to 2.67 per cent. 

Arrears remain benign in the two most populous states plus the nation's capital, according to S&P Global figures. 


Unemployment lowest in more than 5 years Pete Wargent Daily Blog

Employment surges 51,000

With record jobs vacancies an upside surprise was always a possibility, and in the end that's what we got with employment surging by a seasonally adjusted by +50,900 in June 2018 to 12,573,600, driven by a large increase of +41,200 in full time employment.

Employment increased by +2.8 per cent over the financial year. 

To two decimal places the unemployment rate fell to 5.37 per cent, the lowest in 67 months since all the way back in November 2012, in spite of a promising jump in the participation rate. 

If you were to pick out a slight weakness in the numbers, the year-on-year trend growth in monthly hours worked was a tad softer at +2.6 per cent. 

Overall, though, it was an unambiguously good result.

State versus state - NSW booms

The monthly gain was driven by another +27,300 increase in New South Wales employment, taking annual employment growth to a massive +150,400 or +3.9 per cent. 



Australian labour market stronger employment growth but still uncertain Bill Mitchell billy blog

The Australian Bureau of Statistics released the latest Labour Force, Australia, June 2018 today which show that the Australian labour market gained some strength after several months of poor results. Overall employment growth was stronger with a robust increase in full-time employment, although the overall increase in monthly hours worked was modest. Unemployment fell marginally with the unemployment rate steady at 5.4 per cent. However, participation rose by 0.2 per cent and employment growth was strong enough to absorb both the underlying population growth and the new entrants into the labour force. The teenage labour market delivered mixed results with overall employment rising disproportionately but full-time employment declining. A further grey cloud came with the rise in underemployment by 35.1 thousand to 8.6 per cent. The broad labour underutilisation rate rose to 13.73 per cent. Overall, my assessment is that the Australian labour market remains in an uncertain state and is still a considerable distance from full employment.

The summary ABS Labour Force (seasonally adjusted) estimates for June 2018 are:

  • Employment increased 50,900 (0.4 per cent) full-time employment increased 41,200 and part-time employment increased 9,700.
  • Unemployment decreased 1,100 to 714,100.
  • The official unemployment rate remained steady at 5.4 per cent.
  • The participation rate increased by 0.2 points to 65.7 per cent, which is still below its previous peak (December 2010) of 65.8 per cent.
  • Aggregate monthly hours worked increased 10.7 million hours (0.6 per cent).
  • The monthly estimates for June 2018 show that underemployment rose by 35.1 thousand and was estimated to be 8.6 per cent of the labour force. The total labour underutilisation rate (unemployment plus underemployment) was rose to 13.73 per cent. There were 1,137.8 thousand persons underemployed and a total of 1,826 thousand workers either unemployed or underemployed.

Employment growth much stronger in June

Employment growth was stronger in July after a several months of mediocrity.

Employment rose by 50,900 with full-time employment increasing by 41,200 and part-time employment increasing 9,700.

The following graph shows the month by month growth in full-time (blue columns), part-time (grey columns) and total employment (green line) for the 24 months to June 2018 using seasonally adjusted data.

It gives you a good impression of just how flat employment growth had been leading into 2017.

Overall: todays result signals a stronger labour market.

Whether that is the start of a stronger trend will be revealed in the next few months.



Protect Yourself from the Crazy Man Theory Daily Reckoning Australia

One topic thats received a lot of attention lately is what some call the crazy man theory of negotiation.

This theory says that a rational actor trying to optimise the outcome of a negotiation can benefit from making the other party to the negotiation believe hes mentally unstable.

This perceived instability by one side throws the other side off-guard and confuses their analysis.

This confusion can then be exploited to optimise the outcome for the presumed crazy man.

A simple illustration is a chess game the ultimate in rational calculation and decision-making.

The two sides in chess are white and black; white goes first.

White might open with Queens Pawn to Queens Pawn 4 a traditional opening. Black sees this traditional opening and immediately eliminates 19 other possible openings and thousands of possible second moves by white from his calculations.

White has chosen a path but ultimately has given up millions of other paths. Black makes his first move accordingly. White assesses blacks gambit and either proceeds with his original plan of attack or adjusts as needed.

The game proceeds from there, rational move followed by rational move until the endgame.

But suppose instead black simply raises his forearm and wipes all the pieces off the board onto the floor, looks up at white and says, Your move, pal.

Thats the crazy man theory in action.

Arguing with a crazy man

Ive encountered many crazy man negotiators in my four-decade career as a lawyer.
I dont negotiate that way myself, but Ive seen it in action.

Goldman Sachs infamously threw spitballs as I was negotiating the rescue of LTCM in 1998.

At one point Goldman lobbed in an offer to buy LTCM, signed by Warren Buffett and Jon Corzine, while Corzines people were at the Fed simultaneously pretending to play nice with the Wall Street consortium.

That crazy man tactic almost worked until Buffetts lawyer failed to get Buffett on the phone to approve my required changes. Buffett was on a fishing trip in Alaska with Bill Gates at the time and out of mobile phone range.

So I told Buffetts lawyer nothing done and went back to the Feds plan.

Still, crazy man tactics can be productive.

If you have a specific goal in mind and a crazy man is in action, you might say to yourself, OK, this guy is nuts. What will it take to settle him down, get him back to the table and get a deal done we can both live with?

The crazy man also burns up time and energy because your calculations and prior progress are often thrown in the trash. The crazy man literally wears you down.

The key attribute for dealing with a crazy man negotiator is patience. Your most powerful weapon is just walking away from the table. Thats how you turn the tables and wear out the crazy man.

Still, its not easy.



America Overrules Trump: No Peace With Russia "IndyWatch Feed Economics"

America Overrules Trump: No Peace With Russia

Paul Craig Roberts

The governments of Russia, China, Iran, and North Korea, if their countries are to survive, must give up their deluded hopes of reaching agreements with the United States. No such possibility exists on terms that the countries can accept.

American foreign policy rests on threat and force. It is guided by the neoconservative doctrine of US hegemony, a doctrine that is inconsistent with accepting the sovereignty of other countries. The only way that Russia, China, Iran, and North Korea can reach an agreement with Washington is to become vassals like the UK, all of Europe, Canada, Japan, and Australia.

The Russiansespecially the naive Atlanticist Integrationistsshould take note of the extreme hostility, indeed, to the point of insanity, directed at the Helsinki meeting across the entirety of the American political, media, and intellectual scene. Putin is incorrect that US-Russian relations are being held hostage to an internal US political struggle between the two parties. The Republicans are just as insane and just as hostile to President Trumps effort to improve American-Russian relations as the Democrats, as Donald Jeffries reminds us.

The American rightwing is just as opposed as the leftwing. Only a few experts, such as Stephen Cohen and Amb. Jack Matlock, President Reagans ambassador to the Soviet Union, have spoken out in support of Trumps attempt to reduce the dangerous tensions between the nuclear powers. Only a few pundits have explained the actual facts and the stakes.

There is no support for Trumps agenda of peace with Russia in the US foreign policy arena. The president of the Council on Foreign Relations, Richard Haass, spoke for them all when he declared that We must deal with Putins Russia as the rogue state it is.

Russia is a rogue state simply because Russia does not accept Washingtons overlordship. Not for any other reason.

There is no support even in Trumps own government for normalizing relations with Russia unless the neoconservative definition of normal relations is used. By normal relations neoconservatives mean a vassal state relationship with Washington. That, and only that, is normal. Russia can have normal relations with America only on the basis of this definition of normal. Sooner or later Putin and Lavrov will have to acknowledge this fact.

A lie repeated over and over becomes a fact. That is what has happened to Russiagate. Despite the total absence of any evidence, it is now a fact in America that Putin himself put...

Wednesday, 18 July


Daily Digest 7/18 - Health Insurers Collecting Personal Details, Detroit Reborn At A Cost "IndyWatch Feed Economics"

Daily Digest 7/18 - Health Insurers Collecting Personal Details, Detroit Reborn At A Cost
  • In the Worlds Most Dangerous Nation, Police Get a $3 Bonus
  • Health Insurers Are Vacuuming Up Details About You And It Could Raise Your Rates
  • In face of strike threat, Metro says finances are 'unsustainable'
  • U.S. warns African nations against Chinese debt, offers 'sustainable' alternative
  • Federal judge rules in favor of bondholders on Puerto Rico debt
  • Scammers target those with outstanding student loans
  • Interest on credit-card debt tops $100 billion
  • Australian Housing Costs Rival New Yorks, but Boom May Be Ending
  • Reserve Bank focuses on household debt risks (Australia)
  • 5 years after declaring bankruptcy, Detroit reborn at a cost

Join the conversation

IndyWatch Australian Economic News Feed Archiver

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