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Friday's Top 10 with NZ Mint: Australia's vanishing housing supply problem; Creating a German Europe rather than a European Germany; China's Kleptocracy Part 2; Clarke and Dawe; Dilbert

Posted in Opinion

Here's my Top 10 links from around the Internet at 8.30 pm today in association with NZ Mint.

We welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.

See all previous Top 10s here.

My must read today is #3 on a German Europe. The wars are mentioned.

1. Not so much of a supply problem - The conventional thinking in Australia is that house prices are so high there because there is a shortage of new houses being built, particularly in Sydney, and hordes of new people are arriving.

So, the theory goes, the painfully high multiples of house prices to incomes can be justified by excess demand and supply shortages, not necessarily a surplus of credit.

Now, it seems, the theory may be wrong.

Related Topics

Bloomberg reports from figures from the Australian census that there are actually almost 1 milllion fewer households in Australia than previously thought. There's only 7.8 million households, not the 8.7 million previously estimated.

And Australia's population is 300,000 fewer than previously thought at 21.5 million.

Woops.

That might explain the 5-10% fall in house prices across much of Australia in the last year.

But that still leaves an affordability problem, which is reflected in high rents and people moving back in with there families.

The increase in the number of people living in group households and in apartments and townhouses backs this up, said David Collyer, campaign manager at tax reform advocacy group Prosper Australia.

“Young adults have gone back home with mum and dad, or are sharing houses,” said Collyer, who argues that Australia has an oversupply of housing based on statistics showing water usage and new building data. “Household sizes have gone up even more than people think, and the oversupply of housing will be revealed to be even worse than we thought.”

As more Australians live with friends or parents to combat falling affordability, the number of vacant dwellings rose to 934,471 in the 2011 census from 830,376 in 2006.

The increase was at least partly due to more Australians owning second or holiday homes, said Matthew Hassan, Sydney- based senior economist at Westpac

2. The problem in Italy -Bloomberg reports Italians are already creating an art of not paying a new tax designed to bring Italy back towards surplus.

Sigh.

What is it with old rich people who don't want to pay their taxes?

Luciano Di Pardo, a lawyer in Milan, is dodging Italian Prime Minister Mario Monti’s new real estate tax.

“I didn’t pay it,” Di Pardo, 75, said of the levy that was the centerpiece of Monti’s austerity budget. “I get that we are on the edge of failure and disaster, but you can’t keep taking from ordinary people.”

The new levy, which should have cost Di Pardo about 500 euros ($630) when the first payment was due on June 18, may mark the limit of how much Monti can squeeze out of taxpayers. The belt-tightening is also sinking the prospects of Monti’s supporters in parliament and deepening Italy’s fourth recession since 2001.

Italy’s main political parties, which agreed to suspend their rivalries and back the unelected Monti when he was appointed in November, have seen their support plummet to the lowest in about two decades. Soured voters like Di Pardo are turning to Beppe Grillo, the comic-turned-politician, who called the euro an “ever-tightening noose” and urged policy makers to consider default.

3. Can't the rest of Europe stand up to Germany? - Anatole Kaletsky writes at Reuters about Germany as a threat to Europe.

He even mentions the wars. Both of them.

He even suggests kicking the Germans out of Euro zone if they don't give up their pseudo-imperial ambitions.

Nobody should be surprised that Germany has become the greatest threat to Europe. After all, this has happened twice before since 1914. To state this unmentionable fact is not to impugn Germans with original sin, but merely to note Germany’s unusual geopolitical situation. Germany is too big and powerful to coexist comfortably with its European neighbors in any political structure ruled purely by national interests. Yet it isn’t big and powerful enough to dominate its neighbors decisively, as the U.S. dominates North America or China will dominate the Far East.

Wise German politicians recognized this inherent instability after 1945 and abandoned the realpolitik of national interest in favor of the idealism of European unification. Instead of trying to create a “German Europe” the new national goal was to build a “European Germany.” Unfortunately, this lesson seems to have been forgotten by Angela Merkel. Whatever the intellectual arguments for or against German-imposed austerity or the German-designed fiscal compact, there can be no dispute about their political import. Merkel’s stated goal is now to create a “German Europe,” with every nation living, working and running its government according to German rules.

Merkel doubtless believes that she is helping Europe when she maternally instructs the Greeks, Italians and Spaniards to “do their homework” and so become good little Germans. But like its less benign predecessors, this effort to impose German hegemony is guaranteed to fail. Europe’s leaders must therefore start considering a previously unmentionable question, perhaps as soon as next week’s summit, if the euro crisis intensifies. This question is not whether Europe will agree to live under German leadership, but whether Germany will agree to live under EU leadership – or whether the other nations must form a united front against Germany to prevent the destruction of Europe, as they have repeatedly in the past.

4. China is a Kleptocracy - Sydney Hedge Fund Blogger John Hempton wrote a provocative post last week that said China had essentially created a system where regular savers were forced to save into a system that guaranteed cheap funds for State Owned Enterprises which then 'stole' from them through the process of inflation.

It cooked up a storm.

Here's his followup and this intriquing conclusion.

Deflation of course will challenge the status-quo anyway. If 400-500 percent of the profitability of SOEs comes from financial repression then the end of financial repression will result in the collapse of the State Owned sector and the collapse of the wealth and privilege led by "hundreds of thousands of Communist Party members and their families". I suspect that the centre would find it increasingly hard to control their regional elites and the regional elites would revolt. [Revolution is almost always an affair of the second-tier elite versus the first-tier elite - the masses rarely drive it. This would be no exception.]

However in the face of that the centre would do anything to keep the inflation rate high. Ben Bernanke might not literally be prepared to throw dollars out of helicopters. The Central Committee - they might go there...

5. Let's all invest in hedge funds - FT reports Even CERN, the physics experiment in Europe employing the best and brightest, now wants to invest in hedge funds, who, by the way, are trying to employ those same best and brightest to invent new black boxes to trade the markets.

Read this and weep.

“This is a golden age of hedge fund investing,” James Dunn, chief investment officer of the Wake Forest University endowment, which manages $1.5bn and has over half its money allocated to hedge funds said. Mr Dunn was also in Monaco to meet fund managers.

According to a survey of institutional investors by Russell Investments, the US$2.4 trillion mutual fund manager, nearly a third of respondents said their allocations to hedge funds were still too low.

Those surveyed collectively had $246bn invested in alternatives including private equity, real estate and hedge funds, and had begun to ditch traditional allocations to bonds and equities.

6. Here's a good deal -  BBC reports an EU court has just ruled that European workers who get sick during their annual leave can take the sick leave once they get back to work...

The European Court of Justice ruling is legally binding throughout the EU.

Thursday's ruling was prompted by a Spanish trade union case against a group of department stores.

"The right to paid annual leave cannot be interpreted restrictively," the court says. The UK does not have an opt-out in this area of EU labour law.

7. The problem with Europe version 93 - Nomura's Richard 'balance sheet recession' Koo reckons the European Central Bank eased monetary policy too much in 2000 just to help Germany out of its hole after its own dotcom bubble (bet that was Kim's fault) burst. HT Joe Wiesenthal at BusinessInsider.

That inflated southern Europe and made Germany relatively more competitive.

Here's the thinking on what now is a godawful mess:

As Germany became increasingly competitive relative to the strong economies of southern Europe, exports grew sharply and  pulled the nation out of recession. Germany’s trade surplus quickly overtook those of Japan and China to become the world’s largest, with much of the growth fueled by exports to other European markets.

In 2005, I told a senior ECB official that it was unfair to force other countries to rescue Germany by boosting their economies with loose monetary policy without requiring Germany to administer fiscal stimulus, when it was Germany that had become so deeply overextended in the bubble. The official responded that that is what a unified currency means: because Germany could not be granted an exception on fiscal stimulus, the only option was to lift the entire region with monetary policy.

In other words, there would have been no need for such dramatic easing by the ECB—and hence no reason for the competitiveness gap with the rest of the eurozone to widen to current levels—if Germany had used fiscal stimulus to address its balance sheet recession.

The creators of the Maastricht Treaty made no provision for balance sheet recessions when drawing up the document, and  today’s “competitiveness problem” is solely attributable to the Treaty’s 3% cap on fiscal deficits, which placed unreasonable demands on ECB monetary policy during this type of recessions. The countries of southern Europe are not to blame.

8. Europe is doomed - The FT's Martin Wolf recently spelt out in detail why the current moves to a fiscal union in Europe are doomed. HT BusinessInsider.

That's because the popular political will to suppress sovereignty in countries simply isn't there, even if Germany finally concedes to make more drastic changes.

"If they agree a federal constitution, a genuinely federal constitution, there will be referendums...[Euro supporters] are going to lose those referendums. This resolution will not be enacted."

Wolf explained that recent developments have completely changed his view of how the crisis will pan out. "I regard a partial break up at least--and it's not the view i took a few months ago--as extremely likely in the next few years."

A "balance sheet recession [in which countries build up too much public and private debt] runs right through the middle of the eurozone...and Europe is almost perfectly designed not to be able to respond to that crisis," he explained. What's more, "the idea that standard austerity programs will work seems to be a fantasy."

9. 'Just relax the rules' - As soon as the pressure comes on, European and American banks argue for the shackles to be loosened on their need for more capital and to have tighter lending and funding rules.

Here we go again at the ECB, courtesy of Reuters:

With the ECB not yet ready to take over the technical but highly political responsibility for rating sovereigns, the bank's policymakers also agreed more immediate ways to help Spain and its banks at their meeting on Thursday.

One source who requested anonymity said the bank would further soften the rules governing debt and mortgage-backed securities - collateral often put forward by Spain's banks, adding that fuller details would be published on Friday.

The discussions come as Spain braces for a downgrade from small ratings firm DBRS, which without a change in ECB rules would trigger an extra 5 percent penalty on Spanish government bonds when used to get ultra-cheap ECB funding.

10. Totally Jon Stewart on the 'Fast and Furious' scandal in America.

 

Bonus 10. Totally Clarke and Dawe on the problems in Europe. An economist has all the answers. The key is to imagine there are economies in Europe.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

16 Comments

1. Australia's vanishing

1. Australia's vanishing households ?????????????
 
We sure look forward to leaning how this "gulf" in the numbers came about.
 
There is something seriously amiss.
 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org

Australian housing shortage

Australian housing shortage arguments collapse – MacroBusiness Au

 
Housing shortage arguments collapse | | MacroBusiness

 
Interesting discussion that follows the MacroBusiness article.

 
To get a better “fix” on this, they need to compare stock and build rates / 1000 population, with a normal housing market such as Texas. Bubble markets (such as ours and Australia) are by definition “abnormal” because of the “in today / out tomorrow” unstable speculative activity they generate.

 
The normal market of Texas has considerably more housing stock per 1000 population than the bubble market of  California for example (check Federal Reserve figures). California build volumes / 1000 population had long been woeful and collapsed to 1 / 1000 (37,000 for 37 million population) back in 2009 after the bubble crashed.
 
This important Fed Report at the times illustrated how Texas had residential stock per 1000 population of 384 / 1000 with California 357 / 1000. In comparison with Texas, California had about a million less houses than Texas - when adjusted for population. Texas built - California bubbled and crashed instead - triggering the Global Financial Crisis -
 
 
Refer - Housing Bubbles: Jumbo Mortgages = Jumbo Problems | Scoop News 

 
Interestingly, there is good strong “normal demand” in the Houston housing market, as the May Monthly Report from the Houston Association of Realtors www.har.com clearly illustrates. That market has the capacity to ramp up supply in response – quickly – ensuring a bubble is not triggered. The median family home price has hit a (don’t laugh) “staggering” $US168,000 (highest on record) with townhouse / condos up to $US141,500 (skewed by substantially increased transactions in the higher price brackets as illustrated within the report) –

 
Houston Assn of Realtors May 2012 Monthly Report

 
The United Kingdom is another “basket case” because of its planning strangulation too, with bubbles inflating and deflating with increasingly wilder swings every decade. Even with an appalling build rate of 1.6 / 1000 (100,000 units for about 62 mil population) Coutts...the Queens Bankers are expecting house prices there to fall 11% -

 
House prices could fall by 11pc, predicts Coutts – Telegraph Blogs

 
The Australian Census numbers are going to send a shockwave through the speculative property fraternity in Australia (and their financiers). Analysing and discussing behaviour in “abnormal” housing bubble markets, is much the same as trying to talk sense in a lunatic asylum.
  
 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org
 

The Economist – The Laws of

The Economist – The Laws of the City

 
Urban research: The laws of the city | The Economist

 
http://www.economist.com/node/21557313

 
Professor Angel contributed the Introduction to the 5th Annual Demographia International Housing Affordability Survey www.demographia.com

 
http://demographia.com/dhi5-preface.pdf

 
Hugh Pavletich
www.cantabriansunite.co.nz
www.PerformanceUrbanPlanning.org
 

"It cooked up a

"It cooked up a storm."
Editors like storms(especially when they are not in it). It increases their readership.
More storms.
Ambrose Evans-Pritchard wrote a book called "The secret life of Bill Clinton".
"In the words of some commentators, the book was "...the most accurate, thorough and fearless account of Clinton corruption yet produced. It offers a detailed expose of the Clintons' ties to drug lords and death squads, in an America rapidly descending into Salvadoran-style lawlessness""
http://en.wikipedia.org/wiki/The_Secret_Life_of_Bill_Clinton:_The_Unreported_Stories
For the latest updates on these topics type the keywords "fast and furious" into google. Its currently a hot political topic so lots of links to choose from.
 

The Fast and Furious scandal

The Fast and Furious scandal is turning into President Obama's Watergate:-
http://blogs.telegraph.co.uk/news/timstanley/100166854/the-fast-and-furious-scandal-is-turning-into-president-obamas-watergate/
Youtube videos seem to be better at conveying the outrage.
From pajamasmedia, Fast and Furious book author(10minutes long):-
http://www.youtube.com/watch?v=ufColuskra8
From CBS. ATF agent explains why he let guns walk(2minutes long):-
http://www.youtube.com/watch?v=p209sIwp8_Y

Regarding #5, I see the

Regarding #5, I see the newspaper headline now...
 
"Cern scientists dump Higgs boson in favour of theoretical profit particle"
 
Scientists working at CERN after finding particles travelling faster than the speed of light have now built a machine to make use of this ground-breaking feat.  While the details are top secret, it is believed to be wrapped up in a Mutual fund.  Trading of said fund takes place at faster than light, which enables transactions to occur before they were placed.  Such trading allows the managers to see when a favourable trade would be been made, place it, then receive the payoff.  When asked for comment, lead physicist Hans Grueber replied "It's about time we [scientists] will get the respect we deserve from Wall St.".
 

No says Mrs

No says Mrs Merkel........
 
 
The Telegraph photo tells it all, with Mrs Merkel clearly in control of the sutuation. The "three pleaders" are clearly in a state of shock.

 
Debt crisis: Angela Merkel defies Latin Europe and the IMF on bond rescue – Ambrose Evans Pritchard - UK Telegraph
 
 
....Liam Halligan of The Telegraph...

 
Eurozone nations are stuck in a 'doom loop’ - Telegraph
 
 

..and IaIn Martin of the UK Telegraph as well...

 
Is there any solution in sight to the eurozone crisis? - Telegraph
 

 
....Market Oracle...Spanish Banks cooking the books...

 
Spain's Banks Cook the Books as House Prices Crash Accelerates :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website  
 
 
...Reuters...While Spanish house prices fall at steepest rate on record...

 
Spain house prices fall at steepest rate on record | Reuters
 

 
 

Stupidity reigns in all walks

Stupidity reigns in all walks of life.
When a deranged killer is allowed to walk freely amongst us due to medical stupidity, Personally I think it is an accident waiting to happen.
When encouraging the World to borrow ever increasing amounts of money to make money, to borrow even more money to make money, Personally I think it is an accident waiting to happen.
When  State funded idiots can spend us into the ground, sell orf our assets and expect us to pay even more for the priviledge, Personally I think this is an accident waiting to happen.
Maybe we should expand ACC to cover all accidents, waiting to happen.
 

" Maybe we could expand ACC

" Maybe we could expand ACC to cover all accidents , waiting to happen . " ......
 
...... I thought we already had ......

GBH.. I do not think we have

GBH..
I do not think we have deep enough pockets to cover all "Accidents waiting to happen".
Anything a Poll-lie or a Bwanker does is not covered, but they are. (By the rate-payers)
Anything a DPB exponent slips up is also covered.
(These pills must not be working...there must be a slip-up....somewhere)
(Though 18 years is a bit much for a simple slip-up, send em down the mines and up the chimneys before that..........just joshing...just)
We are getting more slip-ups than ever before.  Havn't they herd of family planning.
At least when ACC slips up, they fire the staff, not the Minister who always slips up with a silly smirk on her face and announces the fate of another contender.
We presumably then pay for them on Welfare, after their slip up, which is a double whammy, nay triple whammy as we was already paying for their salary before hand, before another slip-up, nay it may be quadruple as we is gonna pay for their Pension Scheme.....too.
It is this compounding of slip-ups that get me....GBH......it...does me grievious bodily harm in the pocket......and for that there is no................. COMPENSATION.
No wonder I get i-rate, over taxed and under stated.....and they took my capitals away, but sometimes ...I SLIP-UP...too.
PERIODICALLY.
Lucky no one cheques at the weekend....or I will be paying............ AGAIN.

Why would an Australian

Why would an Australian citizen feel he needs to hide in a South American Embassy!...unable to return to Australia...ever....What does this tell us about the Australian govt!

.... in his narcassistic

.... in his narcassistic dreams , Julian A. ( you guess what the " A " stands for ) thinks that the CIA are after him ...... had they wished to extradite him , that process would be underway already ....
 
Now he needs to hide from his supporters , who blew their $ 350 000 , when he jumped bail ....
 
... nothing wrong with the Australian government , Wolly ...... Angela Merkel is gonna distribute pink batts around the Eurozone , introduce the world's steepest carbon tax , and post cheques in the mail to voters ...... It's worked for Australia , cobberdiggerMerkel ...... could work for you too !

Word on the street Gummy..JA

Word on the street Gummy..JA received word that a grand jury is operating in secret in the US to drag him back there.....so the US govt can lock him away for a million years or execute him...!
 

reading between the

reading between the lines...
I think he has been taking a leak out of all Western Govts...so they all want to make an example of him, so he has no place to hyde..., except with the off-siders, with no direct treaty.
Them leaks are way too near the truth...for a comfort stop...elsewhere, hence nowhere to hyde.
Talking of Rodney.....where the hell has he gorn.....South....or North....or just West.
It is so easy to get off-side with these Westerners, no one is safe, not even a Jaffa yellow jacketed, former associate, with travel on his mind..
So better  keep quiet......if ye know what is good for you....don't be a wolly....Wolly.
Taking the piss out of em will get ye banned too...my esteemed...Southerner...and the north and south will be no place to hyde...
Though there is always Paris and Hawaii, I don't think they have an extra-tradition treaty, with our Parliamentarians, here in NZ.... the expense account don't stretch that far....these days.
If ya know what I mean.
Them leaks is getting beyond a joke....and taking the piss, can have a rebound effect, so often ye can be held.......to..............account.
You can read just about anything, into anything these days....and ye don't even have to read my lips.
 

Here is a beautiful story

Here is a beautiful story demonstrating what you can do  when your getting the runaround.
 Please take the time to watch the Video, it's feel good all the way ,,,,!
 
  Sweet Revenge for a Broken Guitar 
 
 A musician named Dave Carroll recently had difficulty  with United Airlines.

United apparently damaged his treasured  Taylor guitar
($3500) during a flight. Dave spent over 9 months trying  to get United
to pay for damages caused by baggage handlers to his  custom Taylor
guitar. During his final exchange with the United  Customer Relations Manager, he
stated that he was left with no choice  other than to create a music
video for Youtube exposing their lack of  cooperation. The Manager
responded: "Good luck with that one,  pal."

So he posted a retaliatory video on Youtube. The video
has  since received over 6 million hits. United Airlines contacted  the
musician and attempted settlement in exchange for pulling the  video.
Naturally his response was: "Good luck with that one,  pal."

Taylor Guitars sent the musician 2 new custom guitars  in
appreciation for the product recognition from the video that has  led
to a sharp increase in orders.
United Airlines has had huge  negative pr and a drop in bookings by around 5%.
 
 A wonderful  example of  little fellow against big arrogant  corporation.
             
 
 Here's the  video, and it's GREAT!

             http://www.youtube.com/watch_popup?v=5YGc4zOqozo
off topic i know Bernard , ........but some welcome relief , well for this guy anyways.