Interview on Engineer.net
I was recently interviewed by Eric Tavenier for the website Engineer.net, which is an engineer recruitment and job search service in the USA.
Eric was taken with my advocacy of what I called “Engineer Capitalists” (in contrast to the financial spivs who dominate business today in the USA) in my interview on The Keiser Report, and wanted me to elaborate for his audience. The interviews have been posted to YouTube (see below).
For Australian viewers, there was an interesting report in today’s Sunday Telegraph on the level of mortgage debt in Australia, which now exceeds 100% of our GDP–higher than America at 95.5%.
The story “Credit binge sets new debt record” by the Sunday Telegraph’s Business Editor Nick Gardner, was the front page lead, and continues on to page 8. It has led to two interviews today by Channel Nine and the ABC, which should run on tonight’s news bulletins (Sunday December 27th).
BTB,
But the particular grant (HCAP) that has just been extended is only available for house and land packages or new units and FHO are not eligible.
An investor can buy a H&L package and get the SD exemption. Someone who does not own but is ineligible for the FHVG can also get it. If you got the FHVG before you can now get the HCAP S/D exemption. Super funds can get it.
The grant is also eligible for substantially renovated properties – so theoretically a developer can but an old house, substantially renovate it and the buyer of the property is then eligible for the grant.
As I noted before this is one for the developers – you know them, the mates of NSW Labor.
Philip #77
You are totally ignoring the important economic paradigm
…
Bankers… “Do Gods Work”
People are locked up in psychiatric wards for months and forceably treated with very powerful drugs for less delusional thinking than Lloyd Blankenfein… CEO Goldman Sachs
http://www.dailymail.co.uk/news/article-1226114/Goldman-Sachs-chief-says-Gods-work-defends-banks-bumper-profits.html
Lloyd Bankenfield has told us the answer we are quiesting for… “Banks have an important social purpose”
A purpose this important MUST BE STATE OWNED & STATE CONTROLLED.
“The Army”, “The Police” and several other ‘low paid’ vital State functions are controlled by ‘The state’.
It’s obvious… “Banks… Doing Gods Work” MUST be owned and controlled by ‘The State’
Australia has 1/2 a chance if we can quickly build a large locked ward and coral all our private bankers into it to obtain some very powerful medication and possibly ECT.
The Australian economy is doomed if we allow the likes of Gail Kelly to duplicate the delusional Lloyd Bankenfield… “Do Gods Work”
Australians cannot allow all these delusional pychopaths to control our ‘Credits create Deposits’ monetary system.
It was noted by BTB some of the problems in the debt and bond markets. Here are somne reports on the recent auctions and market expectations:
http://www.cnbc.com/id/34609314
http://www.bloomberg.com/apps/news?pid=20601087&sid=acRFxLv.Pzwk&pos=3
http://www.bloomberg.com/apps/news?pid=20601087&sid=a7I0yRLF4adQ&pos=4
Ric Battellino may be right, the banks may eventually do all the heavy work of lifting rates for the RBA.
dj #82
Given Australian houses are now roughly twice the price of US houses we will someday soon either need Australian interest rates to be roughly 1/2 the US or Australian wages to roughly double
AUD/USD exchange rate ~ 45 maybe
Hi Philip #77,
“Conventional economic theory is a fig leaf for our masters in the private sector (banks? multi-national corporates?) to loot the wealth of our country and place it in their hands, and this process is helped along by the state. The EMH is just one of many falsified economic models that constitute this fig leaf.”
FWIW 100% agree. The current economic system summed up in one paragraph. We can all go home now. Nothing more to say (joking).
Craig James… Compound 10% growth in household debt is no problem (when via a self reinforcing positive feedback loop it causes 10% compound growth in household assets ‘at market price’).
Using Craig James stellar logic, Australians should be increasing household debt at 15 – 20% compound rates. Lets all get rich faster… No problem Craig!
http://switzer.com.au/latest-news/news-stories/the-truth-about-household-debt/
A very sobering piece in the Irish Times newspaper, showing how bad it can all get…
http://www.irishtimes.com/newspaper/opinion/2009/1229/1224261354227.html
Example: only 4000 of Ireland’s boomtime job creation were in the export industry.
Craig James sounds just like Larry Kudlow of CNBC back in ’07-’08 , who spewed similar rants about the debt being inconsequential because it was accompanied by soaring increases in net worth. No concerns about “bubbles” , since real estate only goes up. Everyone knows that.
Here’s a quote about U.S. CRE that might well apply to the Aussie RE situation someday soon:
>>> After discussing rising vacancy rates and falling rents, the article finishes with this great quote:
“About a year and a half ago, we thought we were different,” [Jim DeLisle, a University of Washington professor of real-estate studies] told one recent forum. “Nobody is really different.”
How many times did we hear “it is different here” during the housing bust? <<<
http://www.calculatedriskblog.com/2009/12/cre-we-thought-we-were-different.html
Debtjunkies,
You mentioned:
” Ric Battellino may be right, the banks may eventually do all the heavy work of lifting rates for the RBA. ”
Word on the street is that this was a contrived arrangement to make the Australian banks scapegoats for any interest rates rises prior to the Federal election next year. It makes you wonder whether the scrapping of account fees was a prelude to giving the banks the green light on interest rates.
If the banks do raise rates further, expect Wayne Swan to have whinge, but don’t expect him to do anything about it.
Nice link “Hactuary”, I suspect the Irish will be one of the first to see major re adjustments in the ‘value of
( or rather placed upon) labour’.
Did you read the other thought provoking story in the same edition ?
http://www.irishtimes.com/newspaper/opinion/2009/1229/1224261353873.html
Here is an article from Bloomberg that should frustrate Professor Keen.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a6hfchM9LqBw&pos=12
“The U.S. economy next year will turn in its best performance since 2004 as spending perks up and companies increase investment and hiring, says Dean Maki, the most-accurate forecaster in a Bloomberg News survey.”
And about those reserves held by the Fed.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aioeVBhCvFB4&pos=7
“The Federal Reserve proposed a program to sell term deposits to banks to absorb some of the banking system’s $1 trillion in excess reserves now threatening to accelerate inflation as the economy recovers.”
And the reintroduction of sections of the Glass-Steagall of 1933.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aeQNTmo2vHpo&pos=10
“A one-page proposal gaining traction in Congress could turn back the clock on Wall Street 10 years, forcing the breakup of banks, including Citigroup Inc.”
“The bill could also force the unwinding of deals consummated during the financial crisis, including Bank of America Corp.’s acquisition of Merrill Lynch & Co.”
One part of interest to me is this.
“Splitting banking functions needed for the smooth operation of the economy from riskier securities and trading activities was proposed earlier this year by the Group of Thirty, a nonprofit organization made up of former government officials and bankers, including Paul Volcker, a former Fed chairman and head of the president’s Economic Recovery Advisory Board.”
I know of Paul Volcker since he had dealings with an Australian ex-patriot, James Wolfensohn.
http://en.wikipedia.org/wiki/James_Wolfensohn
James Wolfensohn appears in Endgame behind darken glass.
http://www.youtube.com/watch?v=qTMdjC0kqxc
If Citigroup is broken up and there is an unwinding of Bank of America Corp acquisition of Merrill Lynch, this would just leave Goldman Sachs, Morgan Stanley and JPMorgan Chase as potentially viable American banks. 2010 will be interesting.
Does anyone believe that Australian’s, with a higher household Debt/GDP ratio than USA households, can possibly have household interest rates (aka debt service costs) higher than the USA households long term?
If Australian household interest rates are lower than USA household interest rates (aka debt service costs), long term, how can anyone believe that the AUD/USD exchange rate will not decline (alot) in the longer term?
Is this why Westpac is offering 8% for AUD 5 year fixed deposits? Maybe that is cheaper than foreign (US & UK) finance plus Fx (exchange rate risk hedging) cost.
Quote from the article that Hactuary @ 86 linked.
“To fund this suicidal lending, Irish banks borrowed heavily internationally, and now must pay it back fast as the world realises that our recent economic miracle was less in the spirit of Adam Smith than of Bernard Madoff. As Irish bank lending returns to ordinary international levels, property prices will fall by at least two-thirds from their peaks.”
Sounds just like Australia to me!
angophera @ 84,
Yes, the banks and MNCs of the parasitic FIRE (finance, insurance, and real estate) system. The florist and baker on the corner is hardly a beneficiary of the system.
«Given Australian houses are now roughly twice the price of US houses we will someday soon either need Australian interest rates to be roughly 1/2 the US or Australian wages to roughly double
AUD/USD exchange rate ~ 45 maybe»
Asset prices bubbles have happened in all countries where there was a definite political goal of redistributing purchasing power from earned income to asset rents; because capital gains are income, and when asset prices double, the income of a worker without assets does not increase, that of the owners of a $1m asset goes up by $1m, and that of the owner of a $10m asset goes up by $10m. This is according to the Gospel principle that to those who have more shall be given, and from those who have less shall be taken.
Ann this in nominal terms, so there are two outcomes: production or exports go up by the same amount and then that increase is simply given to asset owners, or production or exports don’t go up, and then the existing production is simply repartitioned via inflation.
The USA have chosen the latter course, where earned income has not grown for a long time in nominal terms and is starting to fall in real terms despite growth in productivity.
Australia may yet choose the first course: if commodity exports grow in value, then the capital gains enjoyed by the asset rentiers will be funded by those.
The background issue is that when 70% of voters and campaign donors are petty rentier landlords with a fairly secure income besides, they will consistently (and stupidly) vote for policies to drive down wages and bubble up asset prices, as they love effortless enrichment via capital gains, and for many of them the capital gains on their homes have been for the past several years much bigger than any possible increase in their salaries.
Voters will choose that way even if most of them have relatively little assets and the biggest beneficiaries will not be them, but much bigger landlords, such is the lure of effortless enrichment at the expense of the suckers (younger people, especially immigrants) that have less or no assets.
Steve#35,
I can recommend Scilab (freeware). I’m still at a fairly primitive stage with it but I’ve got a system running which is an extension of your intermediate model with 4(*) sectors and 24 ode’s which takes less than 1/2 sec or so to run (graphics slower). This is on a ~$600 Toshiba notebook from Dick Smith’s.
(*)4=2×2, not 3+1. ie I’m not trying to have one more sector than you, but rather to consider a “sector” in terms of parameters such as risk (high,low), response time (rapid, slow) leading to aggregating categories according to these (eg biotech, risk=high, response=slow; infrastructure, risk=low, response=fast, etc)
Re #95 DJC: Wo! With both you and ak rolling on Scilab, it looks like I’d better give it a try myself. I am also starting to work with Mathematica on the modeling. But a public domain program would make it all much more accessible.
As I noted off-list to ak this morning, the most useful trick to do in Scilab would be to ape my method of deriving systems of ODEs from a table. Then there would be no limit to the number of sectors that could be modeled.
Steve,
That’s something I wanted to ask you, about your ode’s from a table. I thought this was a mathcad thing (really good; the major problem I have had with with this kind of stuff is just keeping track of what parameter/coefficient is doing what – much harder than the underlying mechanism) but it seems you have done it yourself. Can this be done in Scilab – I mean so it’s transmitted automatically into ode()? A related thing, Scilab can read .xls files which would be a good way to store simulation profiles across a project but it doesn’t seem to want to read OpenOffice.org (freeware) files. Anyone got any ideas on this? No doubt the Scilab team could do this if there is enough interest.
Mactav #68
In the following chart, one I usually pull out and update when the mind turns to the next years plan, is, for every day since Aug 1984, the count of whether it was a day when the direction [up / down] reversed [the "0"s], and how many days after that change it continued up or down[e.g. -1 is second day down etc], the count of how many days experienced a particular run count, and the percentage movement on that day.
So for example, the number of times in that time period that you have been in the situation where stocks [the AllOrds] have fallen for 6 days in a row is 52, and the average fall on each of those 6th days is -0.61%
This little quiz is, making the assumption that this is all the data you have, but you had it Aug 1984, to see if you can determine a preset plan that is buy amd sell simply with regards to the days a run in a particular direction has occured, and generate a positve return.
Run CountOfRun AvgOf% Change
-11 1 -7.26%
-10 1 -2.91%
-9 3 -0.65%
-8 5 -0.61%
-7 19 -0.80%
-6 29 -0.60%
-5 52 -0.61%
-4 100 -0.73%
-3 192 -0.92%
-2 378 -0.72%
-1 748 -0.70%
0 3010 0.04%
1 836 0.70%
2 458 0.66%
3 267 0.60%
4 145 0.59%
5 83 0.52%
6 47 0.49%
7 26 0.40%
8 17 0.51%
9 7 0.49%
10 3 0.33%
11 1 0.66%