Aussie government scores crucial victory, Bitcoin goes bananas (again) as EU cracks down, US Republicans expect tax bill to pass, NZ dollar at US69.93 cents

Here's our summary of key events from over the weekend that affect New Zealand with news Australia's Federal Government scored a crucial win. 

Prime Minister Malcolm Turnbull's Liberal Party won the Sydney seat of Bennelong in a byelection through its candidate John Alexander, a former tennis player and commentator. The victory is much needed for Turnbull and the Liberals following the recent citizenship fiasco that saw them lose their lower-house majority, which they've now regained.

Also in Australia, the AFR is reporting (behind its paywall) that anti-money laundering regulator AUSTRAC says ASB's parent Commonwealth Bank of Australia ignored as many as six warnings that its systems weren't up to scratch in the aftermath of its troubled ATM roll-out.

Bitcoin just can't be kept out of the news at the moment, and here are a couple more stories on the cryptocurrency.

Firstly, the world’s largest derivatives exchange operator CME Group Inc is launching its own contract to trade bitcoin. Reuters reports this second US bitcoin futures launch is seen as another step towards big institutional investors warming up to bitcoin which until recently was accessible only via largely unregulated markets. As with the futures contract launched last week by rival Cboe Global Markets, CME’s will be cash settled. But it will be priced off an index of data from several cryptocurrency exchanges, rather than just one.

This news has seen the bitcoin price push further into unchartered territory, reaching US$19,783.06 and testing US$20,000.

Meanwhile, the European Union is striving to toughen rules to prevent money laundering and terrorism financing on exchange platforms for bitcoin and other virtual currencies. Bitcoin exchange platforms and “wallet” providers holding the cryptocurrency for clients will have to identify their users under the new rules that now must be formally adopted by EU states and European legislators and then turned into national laws within 18 months.

In the United States Republicans are confident their controversial tax bill will be passed by Congress this week, possibly on Tuesday, and then signed by President Donald Trump by week's end. If passed, the bill would be the biggest US tax rewrite since 1986 providing Republicans with their first major legislative victory since Trump took office in January.

In China electric vehicle maker NIO has launched the ES8, a seven-seater electric SUV in what's being touted as a challenge to Tesla given it costs about half as much as Tesla's Model X at  448,000 yuan (US$67,788) before subsidies. The Model X starts at 836,000 yuan after import duties.

This morning the Kiwi dollar is at US69.93 cents, AU91.46c, and 59.50 euro cents.  

And in New York, the US 10-year treasury yield is unchanged at 2.35%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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27 Comments

The US tax bill has the potential to turn the screws on the high-local-taxing (red, mostly) States, by capping the SALT deduction (previously no cap existed). In effect, and considerably simplifying the terrifying complex US tax code, whatever the local taxes (City, State) amount to, comes off the Fed income tax bill. This sets up a perverse incentive for Cities and States to tax away, in the full knowledge that it's the Feds who wear the reduction in revenue thus ensuing.

That's all about to change.....

Note also that NZ has no such double-tax-prevention arrangement. We pay GST on TLA rates, as a prime example.

I have just read a summarized version of the proposed restrictions on foreign buyers of property in NZ and I am left wondering if Government has not created a rod for itself .

As part of the overall package , it seems highly skilled persons on work visas will not be entitle to acquire a home and they will become renters .

Great , if only we had decent houses to let .

So the opthalmic surgeon , or heart surgeon or ENT ,we desperately need here will be forced to rent .

In a best case scenario , the employer ( Ministry of Health ) will have to supply housing because there is nothing to rent or a worst case sceanrio the surgeon will be forced to rent a leaky shack in West Auckland for $700 per week .

Methinks , our lawmakers have not thought through this one at all .

It is rapidly becoming know as the Goverment of Unintented Consequences (GUC).

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13

Really? Is it? Or did you just make that up?

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10

If they're on temporary work visa's why would they be looking to buy?

Most professionals at that level will quality for permanent residency. Once qualified they can buy property,

Even under current rules, unless they buy unseen before arriving, they will be renting for several months anyway before they can find and buy a suitable property.

Bitcoin has all the attributes of a Ponzi or pyramid scheme , the exception being that it appears it will not fall over .

What is now evident , however, is that it can never be used legal tender simply because it is so volatile .

Can you imagine if our Kiwi $ was so volatile ? Or , worse if the US$ or Aussie $ was so volatile ?

How could any rational business decision ( or even a simple transactiional decision ) be taken with something where the price movements are all over the place by huge margins. It defies logic, and even rational sense .

I'll just sit back and watch this whole thing unravel spectacularly , in due course .

Afterwards , we will wonder how so many people in the world were duped.

Then we will look back on schemes and events before from Tulip bulbs , south sea shares , Bernie Madoff, and Kubus Rotten milk culture.

Maybe instead of rants on this site boatman you could do a bit or research? You are a exbanker of course but times do change...try to keep up
"What we’re witnessing in arguably the grandest display in recent history is dissatisfaction with the status quo, and each dollar exchanged is an act of rebellion, a protest, and middle finger to every bank who is “too big to fail.” As the price of bitcoin grows, so does a collective wager that the people can manage our own transactions more reliably than isolated centralized systems with national borders. Its volatile gesticulation is a global negotiation and argument how best to handle our transactions."
http://www.zerohedge.com/news/2017-12-16/stop-treating-bitcoin-stock

Was I ranting ?

I am more of a cynic than a ranter .

I reckon there is more herd mentality in the Bitcoin stampede, and some FOMO( FEAR OF MISSING OUT ) , which is driving the price.

I have heard that there will even be Bitcoin Derivatives traded in due course............thats the day I will know for sure the world has lost its marbles.

A derivative of thin air

Even better! We'll be able to strip out the Volatility and just trade that.....a VIX on thin air.

Actually people are being so dumb when it comes to Bitcoin they don't realize the risk they are taking and they actually succeed - the risk / reward trade off is actually currently in the speculators favour.....

Or, it could be:
- greed
- money laundering
- any other reasons to hide your identity

Oh for FFA$#5 sake...really......just check some of the funds that went into the Auckland property market and every one of your points is checked.

What, hit a raw nerve there? Criminals are everywhere, all you can do is make it harder for them, you cannot stop them. Bitcoin is too easy at the moment, hence the volatility. There's a reason why money markets are regulated, not only to benefit the few, but protect the masses against the crooks.

Oh you mean HSBC, Commonwealth Bank of Australia..aiding and abetting money laundering but as yet I dont see any regulation you speak of? Large corporations making billions and paying little of no tax in some countries..hows your regulation working in that area?

@frazz , precisely , the silly money that has gone in Auckland property will soon enough see its folly .

Not unlike the silly money that went into the the NZX in prior to 1987 or the Dotcom Bubble of the 1990's or the Finance Companies between 2002 and 2008 or Lehman Bros packging toxic assets for silly Pension Fund managers in Europe.

Bitcoin is not any different , its a scheme pregnant with sophistry , sleight of hand , incomplete information and the unknown

If Bitcoin drops, there is nothing really that provides a "floor". For someone who is in general, uninterested, Its going to be very interesting.

Its not that I am uninterested , but it fails on the first hurdle of any investment ...............it does not make sense .

Fine..great sit on the sidelines and watch ...or buy half a bitcoin and explore the possibilities.
Japanese business to start paying workers in bitcoin
Workers at the Japanese tech firm are free to choose whether or not they want a part of their salary to be paid in virtual currency
http://www.independent.co.uk/news/business/news/bitcoin-japan-business-p...

Does not make sense..or you do not understand it (yet hopefully)

@frazz , when I tried to understand Bitcoin , it raised more questions than answers .

And you are right , notwithstanding tons of information , I still dont understand it .

And I am not closed to new -ideas , we have moved our entire practice onto the cloud , I am in the market for an electric car , I use apps extensively , and I am fascinated by new technology

That aside , from a gut feeling point of view , Bitcoin simply does not make sense and it would be unwise to invest in something like this in my humble opinion

Agree to disagree..and yes I am looking for an electric car as well. Merry Xmas

I'm going to wait until everyday cars like Suzuki Swift are plug in. To buy one now, you would have to be very rich.

I tried to use bitcoin at my supermarket for a bag of chips, They said they did not change bitcoins for real money, just yet. I said Chip in or I would Chip out,

My wife said I could have one for Christmas, My wife is a chip off the old block....so I said Ta..

Potatoes are so dear these days, I shall by her a bag of Agra for a Christmas treat.

She tried to borrowed a penny to spend a penny,, I said what 50p to have a Pee. would be more like it. Don't make cents like they used to....these sayings...Mostly a load of crap.

Wish I had some real money to buy her a Bitcoin, She will have to go without until the chain is pulled.and it goes down the gurgler.

I was gonna wish you all a Merry Christmas, but Santa is bringing me the Bill and I have to pay it with Debt.

I put it all on the Credit Card, and then I will put it on the House. You can pay mei n January when the price is right.

Credit where credit is due, It all sleighs me, this Free Wheeling economy, this Christmas.

Santa says....Rudolf is going into Venison Sandwiches....Anyone want a Bite.

Next year it will worth heaps more...Dear oh Dear.....Deer can only go through the roof, by next Christmas. get in....only 7 more days to go. Oh and Ostriches are on the Menu, not Turkeys.......the Following year.

PS...I only accept CASH...

It is conjoured up out of thin air.....just like bitcoin......and Santa....only locally produced......Buy Magic...or is it By magic..I forget.

Who believes in Santa.....anyway...God only knows....It is Christmas....to make a Buck.

I was gonna chip in to bitcoin...but my Spirit of Christmas....is Whiskey....Hic.......someone is coining it...all through the land....and landing on your roof,,,,if you have been a good boy or girl...this Christmas ..Cheers.

Santa....and my Wife..the Fairy GodMother...of all creation.

"Bitcoin goes bananas" So bananas and so volatile it is useless as a currency or means of exchange. It's getting news at the moment merely because of the stupidity weirdness factor. Which is a reason to move away from it rather than towards it.