Nowhere to Grow

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The lack of expan­sion in the Aus­tralian pri­vate credit mar­kets is cer­tainly hav­ing an adverse effect on com­merce in the post 2008 finan­cial cri­sis period. Annual pri­vate credit growth has aver­aged 3.5%, since it dropped down to sin­gle digit fig­ures in Octo­ber 2008.

Australian Private Credit Growth

Per­sonal credit and busi­ness credit have been the deadweight’s, aver­ag­ing an annual growth of –1% and –0.5% respec­tively. Hous­ing credit has off­set this with an aver­age annual growth rate of 6.9% since Octo­ber 2008. How­ever, this has since slowed to an aver­age annual rate of 5.3% for the first 3 months of this year and is con­tin­u­ing on this slow­ing trend. With sig­nif­i­cantly less credit com­ing into the mar­ket, the Gov­ern­ment have had no choice but to com­pen­sate deficit spending.

Government Securities on Issue 

Though, as pointed out in last week’s blog post Infla­tion or Nofla­tion, the ALP has recently embarked on a mis­sion of aus­ter­ity to please the big rat­ing agencies.

Date: Gov­ern­ment Secu­ri­ties on Issue (AU$ Millions)

Jan-2012

221646

Feb-2012

229706

Mar-2012

236036

Apr-2012

227126*

*As at the 27th April 2012

This leaves increas­ingly fewer options to main­tain a path of eco­nomic growth here in Aus­tralia. The dete­ri­o­ra­tion in credit growth has forced the RBA to revise their already revised eco­nomic out­looks. The fol­low­ing graphs review the RBA’s pred­i­ca­tions ver­sus the actual out­comes for both growth and inflation.

RBA GDP Growth Predictions

RBA Inflation Predictions

While the accu­racy of these out­looks is debat­able, the pre­ci­sion of their recent 2012 pre­dic­tion for infla­tion has posi­tioned the Bank well in jus­ti­fy­ing a 50 basis point reduc­tion of the tar­get cash rate on Tues­day 1 May. How­ever, given the two 25 basis point reduc­tions for Novem­ber and Decem­ber last year had no notice­able effect on credit growth, par­tic­u­larly hous­ing credit growth, I would sug­gest this mea­sure will too pro­vide lit­tle effec­tive­ness. And then, of course, there is always the ques­tion of how much the big banks will actu­ally pass on with their increas­ing fund­ing costs. NAB have so far been the first, pass­ing on 32bps.

With min­ing con­di­tions dete­ri­o­rat­ing, house prices falling, Gov­ern­ment aus­ter­ity mea­sures, a strug­gling retail sec­tor and lack of effec­tive­ness through mon­e­tary stim­u­lus, unfor­tu­nately the Aus­tralian econ­omy has nowhere to grow.

About David Lawson

-Worked as a real estate agent in 2009, have since left the industry because I now see that it is all fuelled by euphoric expections and debt -Started to become concerned about the global debt bubble after reading 'The Credit Crunch' by Graham Turner about a year ago and have since followed Steve Keens debtwatch blog -Competed a Bachelor of economics in 2004 specalising in iternational trade and finance -Lived in the USA for 5 years of my life, have witnessed first hand there frivolous spending patterns and watched our country become the same over the course of last 10 years
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133 Responses to Nowhere to Grow

  1. cliffy says:

    Folks,

    Nice post David.

    Firstly let me say that Aus­tralian soils are old and our arable land is largely dry, so we don’t get the pro­duc­tion per hectare that wet­ter newer soil coun­tries get.

    And apolo­gies for the long list how­ever I think it is worth con­sid­er­ing this in the global context.

    Hav­ing said that Aus­tralia has had the hedge of the “Pad­dock” against the “Quarry” through­out it’s entire mod­ern his­tory. This is a Dis­cre­tionary (Boom) v Non Dis­cre­tionary (Bust) play at a macro real econ­omy national level.

    Fol­low­ing is the list of Arable Land per Capita for coun­tries up until China in the list here: http://data.worldbank.org/indicator/AG.LND.ARBL.HA.PC

    Aus­tralia | 2.15
    Kaza­khstan | 1.45
    Canada | 1.34
    Niger | 1
    Russ­ian Fed­er­a­tion | 0.86
    Argentina | 0.77
    Ukraine | 0.71
    Lithua­nia | 0.61
    Paraguay | 0.6
    Belarus | 0.58
    Guyana | 0.56
    Uruguay | 0.56
    United States | 0.53
    Latvia | 0.52
    Moldova | 0.51
    Sudan | 0.47
    Hun­gary | 0.46
    Cen­tral African Repub­lic | 0.45
    Ser­bia | 0.45
    Den­mark | 0.44
    Esto­nia | 0.44
    Mali | 0.43
    Fin­land | 0.42
    Bul­garia | 0.41
    Roma­nia | 0.41
    Chad | 0.39
    Bolivia | 0.38
    Burk­ina Faso | 0.37
    Togo | 0.37
    Turk­menistan | 0.37
    Namibia | 0.36
    Mon­go­lia | 0.35
    Zim­babwe | 0.34
    Nicaragua | 0.33
    Poland | 0.33
    Brazil | 0.32
    Cuba | 0.32
    Sene­gal | 0.32
    Cameroon | 0.31
    Czech Repub­lic | 0.3
    Turkey | 0.3
    Guinea | 0.29
    South Africa | 0.29
    Benin | 0.28
    Cam­bo­dia | 0.28
    France | 0.28
    Libya | 0.28
    Swe­den | 0.28
    Mon­tene­gro | 0.27
    Spain | 0.27
    Bosnia and Herze­gov­ina | 0.26
    Slo­vak Repub­lic | 0.26
    Tunisia | 0.26
    Zam­bia | 0.26
    Malawi | 0.25
    Morocco | 0.25
    Gam­bia, The | 0.24
    Iran, Islamic Rep. | 0.24
    Ire­land | 0.24
    Kyr­gyz Repub­lic | 0.24
    Afghanistan | 0.23
    Greece | 0.23
    Myan­mar | 0.23
    Syr­ian Arab Repub­lic | 0.23
    Tan­za­nia | 0.23
    Angola | 0.22
    Gabon | 0.22
    Lao PDR | 0.22
    Mex­ico | 0.22
    Mozam­bique | 0.22
    Nige­ria | 0.22
    Thai­land | 0.22
    Alge­ria | 0.21
    Azer­bai­jan | 0.21
    Belize | 0.21
    Croa­tia | 0.2
    Guinea-Bissau | 0.2
    Mace­do­nia, FYR | 0.2
    Uganda | 0.2
    Alba­nia | 0.19
    Equa­to­r­ial Guinea | 0.19
    Fiji | 0.19
    Sierra Leone | 0.19
    Ghana | 0.18
    Ethiopia | 0.17
    Nor­way | 0.17
    Swazi­land | 0.17
    Aus­tria | 0.16
    Lesotho | 0.16
    Panama | 0.16
    Arme­nia | 0.15
    Ger­many | 0.15
    Mada­gas­car | 0.15
    Timor-Leste | 0.15
    Tonga | 0.15
    Uzbek­istan | 0.15
    Cote d’Ivoire | 0.14
    Eritrea | 0.14
    Hon­duras | 0.14
    Iraq | 0.14
    Kenya | 0.14
    Samoa | 0.14
    Botswana | 0.13
    Congo, Rep. | 0.13
    India | 0.13
    Peru | 0.13
    Rwanda | 0.13
    Cape Verde | 0.12
    Lux­em­bourg | 0.12
    Mau­ri­ta­nia | 0.12
    Pak­istan | 0.12
    Saudi Ara­bia | 0.12
    Bhutan | 0.11
    Burundi | 0.11
    Comoros | 0.11
    El Sal­vador | 0.11
    Guatemala | 0.11
    Haiti | 0.11
    Italy | 0.11
    Korea, Dem. Rep. | 0.11
    New Zealand | 0.11
    Por­tu­gal | 0.11
    Soma­lia | 0.11
    Suri­name | 0.11
    Tajik­istan | 0.11
    Congo, Dem. Rep. | 0.1
    Geor­gia | 0.1
    Indone­sia | 0.1
    Liberia | 0.1
    United King­dom | 0.1
    Venezuela, RB | 0.1
    Antigua and Bar­buda | 0.09
    Dominica | 0.09
    Slove­nia | 0.09
    Van­u­atu | 0.09
    Bel­gium | 0.08
    China | 0.08

  2. Dannyb2b says:

    Lyon­wiss

    Yes debt is less use­ful as money because it is only a claim on it. It has more risks attached like default and it is less wide­ley accepted as a medium. You could see it as a deriv­a­tive of money I suppose.

  3. RickW says:

    Dave Law­son
    Are you in a posi­tion to update the blog on progress being made with Min­sky? Is it pos­si­ble to set out a timetable for the devel­op­ment of the var­i­ous ele­ments planned to extend the model.

    How is fund­ing going?

    Also what would need to to done to test pos­si­ble pol­icy adjust­ments such as pub­lic QE?

    It is clear Aus­tralia is head­ing down the same path as UK and US with cuts in inter­est rates try­ing to keep the assets bub­bles inflated until we reach ZIRP then the money will be injected into the banks to keep them afloat rather than reduc­ing the pri­vate debt bur­den directly.

  4. mikeh1980 says:

    Lyonwiss:“Money/cash is a reli­able store of value, if the gov­ern­ment back­ing it is respon­si­ble. Oth­er­wise, one has to fall back on gold and sil­ver, which also mea­sure trust in gov­ern­ments. The US gov­ern­ment has been sup­press­ing the USD gold price to mute the market’s sig­nal of distrust.”

    Why should any­one expect gold or sil­ver or any other metal for that mat­ter to be a store of value? Was gold a store of value in the 90s?

    How exactly is the US gov­ern­ment sup­press­ing the gold price?

  5. Steve Hummel says:

    Just a few observations.

    Cap­i­tal­ism ver­sus social­ism is a false dual­ity. Some actual dual­i­ties are RE-distribution ver­sus Dis­tri­b­u­tion, the Oli­garchy ver­sus the Polis and the will to power ver­sus the will to free­dom. And then there’s the real dual­ity so far as the basic psy­chol­ogy of both indi­vid­u­als and sys­tems are con­cerned, vice ver­sus virtue.

    Read many of Ran­dall Wray’s arti­cles over on credit write downs. He’s a really bright and thor­ough researcher and its pleas­ant just to read what he says. The one thing how­ever that IMO trips him (and nearly every­one else) up is his solu­tions are deriv­a­tive, they just don’t pen­e­trate deeply enough or don’t rec­og­nize what the true oppos­ing ideas, forces, inten­tions or psy­cholo­gies actu­ally are.

    One last actual dual­ity comes to mind and its correlatives:

    Sta­tus quo ver­sus change, the lat­ter of which breaks down into deep ver­sus shal­low and actual ver­sus apparent.

  6. Lyonwiss says:

    @ Mikeh 1980 May 7, 2012 at 4:34 pm

    Gold, sil­ver, plat­inum, rare earths, land etc. all have intrin­sic value, due to their util­ity. That their rel­a­tive val­ues fluc­tu­ate over time does not alter the fact of their real val­ues, which are inher­ently more sta­ble because of con­straints to production.

    The excuse for cen­tral banks to manip­u­late the gold price is to man­age infla­tion expec­ta­tion, which has been going on at least since the 90s. The fol­low­ing min­utes of the Fed meet­ing in 1993 is just one of many examples:

    http://www.federalreserve.gov/monetarypolicy/files/FOMC19930518meeting.pdf

    Note the com­ment by Angell on p.32–33 on the impor­tance of the gold price for the Fed. Note the com­ment by Greenspan on p.40:

    I was rais­ing the ques­tion on the side with Gov­er­nor Mullins of what would hap­pen if the Trea­sury sold a lit­tle gold in this mar­ket. There’s an inter­est­ing ques­tion here because if the gold price broke in that con­text, the ther­mome­ter would not be just a mea­sur­ing tool. It would basi­cally affect the under­ly­ing psychology.”

    Later on p.50, Greenspan said: “For psy­chol­ogy, I think we ought to get Gov­er­nor Phillips to dump her bracelet on the gold mar­ket at some point!”

    A more recent (2005) con­ver­sa­tion between Ron Paul and Greenspan on gold price manip­u­la­tion here:

    http://goldprice.org/news/2005/06/alan-greenspan-on-gold-price.html

    There is a lot of evi­dence of gold price manip­u­la­tion over time. These days, invest­ment banks such as JP Mor­gan and Gold­man Sachs are prob­a­bly heav­ily involved, par­tic­u­larly through deriv­a­tives, which are unreg­u­lated and hide a lot of the trans­ac­tions. Zero Hedge pro­vides a recent exam­ple from trad­ing data:

    http://www.zerohedge.com/news/paul-mylchreest-presents-various-visual-case-studies-gold-price-manipulation

  7. mikeh1980 says:

    Lyon­wiss

    I asked you about US gov­ern­ment sup­press­ing the gold price. I couldn’t give a rats about Gold­man or JPMor­gan. I am only inter­ested in what evi­dence exists of US gov­ern­ment sup­press­ing the gold price.

    As for gold being a store of value — to me gold, like any com­mod­ity, has uncer­tain value. If I buy some today it may well have lost value — as it has in the past — when I want to use it to pur­chase goods and ser­vices in the future. To put it another way why would any­one want to “fall back” on gold or silver?

  8. alainton says:

    The argu­ment has use­fully moved on to how banks eval­u­ate their port­fo­lio and adjust the liq­uid­ity of that portfolio.

    We are on to very tobi­nesque ter­rain — the ideas that so influ­enced God­ley and cur­rent post-kenysian ideas about endoge­nous money (and if you arnt inter­ested in that you wouldn’t be on this website).

    There is a very inter­est­ing dis­cus­sion on this and the extent to which indi­vid­ual banks (as opposed to banks in aggre­gate) can expand money relat­ing to Tobins ideas on the blo­gos­phere at the moment between Daniel Neil­son Inet Money View http://ineteconomics.org/blog/money-view and the very Haw­trian David Glas­ner at Uneasy money http://uneasymoney.com/2012/05/06/james-tobin-got-it-right/

    I had pre­vi­ously thought that Tobins ideas on endoge­nous money were some­thing of a bridge between ‘old’ exoge­nous ideas about money and mod­ern cir­cuitist the­o­ries — as they had a residue of loan­able funds the­o­ries. I was very influ­enced in this view by Rochon’s mag­is­te­r­ial sur­vey Credit, Money, and Pro­duc­tion http://books.google.co.uk/books?vid=ISBN1858988950&redir_esc=y

    This blog exchange how­ever has me think­ing that Tobin was on to some­thing, Glasner:-

    while banks are mak­ing new loans, the pub­lic is also repay­ing old loans, and whether the total quan­tity of deposits is increas­ing or decreas­ing depends on whether banks cre­ate new deposits as they make new loans faster than the pub­lic is pay­ing back its loans to the banks. [this is a very Hawtryian point from his ver­bal model of today what Steve calls the credit accel­er­a­tor] And how fast the banks are cre­at­ing new deposits depends on the eco­nomic incen­tives for cre­at­ing deposits reflected in the struc­ture of yields on alter­na­tive assets and lia­bil­i­ties, and on the costs banks expect to incur in financ­ing their cre­ation of deposits. If banks expect that the pub­lic will hold addi­tional deposits, it will be more prof­itable to cre­ate addi­tional deposits than if the banks have to bor­row reserves in order to meet an increased deficit in inter­bank clear­ings. The quan­tity of loans being made and the quan­tity of deposits being cre­ated are the result of the inter­ac­tion of eco­nomic deci­sions being made by banks and the pub­lic reflected in the entire spec­trum of yields on the full range of assets and lia­bil­i­ties pur­chased and sold by banks.

    Money (bank deposits) may have spe­cial fea­tures, but the decision-making process that deter­mines the amount of money in exis­tence at any moment of time is not essen­tially dif­fer­ent from the process by which the amount of other finan­cial instru­ments cre­ated by other finan­cial other inter­me­di­aries is determined.

    The key point here being that endoge­nous credit cre­ation by banks isnt a wil­ful indi­vid­ual deci­sion about whether to cre­ate money ‘out of thin air’ but an act of invest­ment in an asset (a loan) which has to com­pete against other poten­tially profit mak­ing activ­i­ties in the econ­omy. If the mar­ket in total is lean­ing towards lever­ag­ing or delever­ag­ing and this sends rate of profit sig­nals so the flow of cap­i­tal will shape the invest­ment deci­sions of banks, even though this may be harm­ing the poten­tial prof­itabil­ity of other sec­tors. If delever­ag­ing increases the prof­itabil­ity of banks then equity will be attracted to the bank­ing sec­tor from other parts of the econ­omy and the enhanced equity should even­tu­ally lead to an increase in bor­row­ing as it expands the bor­row­ing power of banks. Of course like for every firm this analy­sis only holds true as far as the firm (here bank) staves off bankruptcy.

  9. Dannyb2b says:

    Alain­ton

    The key point here being that endoge­nous credit cre­ation by banks isnt a wil­ful indi­vid­ual deci­sion about whether to cre­ate money ‘out of thin air’ but an act of invest­ment in an asset (a loan) which has to com­pete against other poten­tially profit mak­ing activ­i­ties in the economy.”

    The act of invest­ment in an asset (new loan) is a wil­ful deci­sion to cre­ate money theres no sep­a­ra­tion because banks cre­ate money when they lend.

    It doesnt mat­ter what the mar­ket sig­nals are really as they are up for interpretation(ask a bunch of bankers how they see the econ­omy some will say we are on the verge of a bull mar­ket oth­ers on the verge of defla­tion). Banks drive busi­ness cycles by expand­ing the sup­ply of com­mer­cial bank money when they cre­ate new loans. If banks feel pos­i­tive they will expand lend­ing and cre­ate a new upswing and vice versa. The eco­nomic sys­tem is depen­dant on the sub­jec­tive expec­ta­tions or inten­tions of profit ori­ented banks which adjust the money sup­ply through their lend­ing deci­sions. The bank­ing sys­tem dri­ves the economy.

  10. NeilW says:

    The key point here being that endoge­nous credit cre­ation by banks isnt a wil­ful indi­vid­ual deci­sion about whether to cre­ate money ‘out of thin air’ but an act of invest­ment in an asset (a loan) which has to com­pete against other poten­tially profit mak­ing activ­i­ties in the economy”

    I do won­der whether the ‘thin air’ thing is pejo­ra­tive and hin­ders cor­rect analysis.

    Banks expand their bal­ance sheets. Other busi­nesses expand their bal­ance sheets as well.

    Is there really that much dif­fer­ence between the analy­sis of a bank asset and its return and the analy­sis of any other intel­lec­tual prop­erty asset and its return?

    The cre­ation process seems pretty sim­i­lar to me — call some­thing an asset and con­vince oth­ers it has value.

  11. alainton says:

    @Dannyb2b

    Way too sub­jec­tivist for my liking.

    Do a % of bankers all sub­jec­tively get up one morn­ing and say hey were going to expand credit today and that explains the credit/business cycle?

    Ques­tions — why are bankers expec­ta­tion on prof­its net pos­i­tive or negative?

    Why does cap­i­tal net flow towards or away from finan­cial inter­me­di­aries as opposed to the pro­duc­tive sec­tor of the economy?

    If a bank has greater or lesser expec­ta­tions on prof­its than other banks and this increases or decreases it prof­itabil­ity what mar­ket sig­nals does that send to other banks?

    This is not to say that indi­vid­ual loan deci­sions arnt impor­tant, but such agency is set within the struc­ture of the cap­i­tal­ist econ­omy where cap­i­tal is always seek­ing the best out-turn.

  12. Dannyb2b says:

    Alain­ton

    why are bankers expec­ta­tion on prof­its net pos­i­tive or negative?”

    Banks his­tor­i­cally have been beset by herd men­tal­ity. They see a mar­ket appre­ci­ate (dot­com, hous­ing, etc..) and they begin to expand lend­ing into that sec­tor more and more cre­at­ing bub­bles and dri­ving new unsta­ble upswings.

    If a bank has greater or lesser expec­ta­tions on prof­its than other banks and this increases or decreases its prof­itabil­ity what mar­ket sig­nals does that send to other banks?”

    Doesnt mat­ter what the sig­nal is much of the time. What mat­ters is how it is inter­preted. If the herd start see­ing the future in a pos­i­tive light for what­ever rea­son they will expand new lend­ing and start a new upswing.

    Why does cap­i­tal net flow towards or away from finan­cial inter­me­di­aries as opposed to the pro­duc­tive sec­tor of the economy?”

    Cap­i­tal flows to finan­cial intrne­di­aries due to inter­est, loan repay­ments to a large extent.

  13. NeilW says:

    but such agency is set within the struc­ture of the cap­i­tal­ist econ­omy where cap­i­tal is always seek­ing the best out-turn.”

    And what is the evi­dence for ‘best’? Why not ‘good enough’?

  14. Lyonwiss says:

    @ Mikeh1980 May 7, 2012 at 7:41 pm

    You said: “I asked you about US gov­ern­ment sup­press­ing the gold price. I couldn’t give a rats about Gold­man or JPMor­gan. I am only inter­ested in what evi­dence exists of US gov­ern­ment sup­press­ing the gold price.”

    Gov­ern­ments’ trans­ac­tions directly in gold are well-known and trans­par­ent. But the US gov­ern­ment (and oth­ers) may also deal indi­rectly through bro­kers, such as JP Mor­gan and Gold­man Sachs, because price manip­u­la­tion (unlaw­ful) to man­age infla­tion expec­ta­tions has to be done covertly. You obvi­ously are not aware of the “revolv­ing door” in the peo­ple con­nect­ing the gov­ern­ment and the finan­cial sec­tor, help­ing oper­a­tional con­fi­den­tialty, in the name of main­tain­ing mar­ket con­fi­dence (among other things). Some of the evi­dence are sug­gested in the links I provided.

    You have a very emo­tional reac­tion to gold. In some coun­tries or in some stressed sit­u­a­tions, gold may be the only cur­rency accepted to set­tle trans­ac­tions. A day may yet come when the USD may not be widely accepted, out­side the US, to set­tle trans­ac­tions. I have 5 to 10 per­cent of my wealth in gold for “insur­ance” against gov­ern­ment cor­rup­tion and incom­pe­tence. Clearly, there is no need for this oth­er­wise, as I’m not a “gold bug” speculator.

  15. alainton says:

    @NeilW

    And what is the evi­dence for ‘best’? Why not ‘good enough’?’

    Because CEOs that aim at that tar­get get fired, as do soc­cer man­agers, and investors get wiped out in the long run as there invest­ments no longer act as a store of value in real terms.

    Hil­fer­d­ing — who put it more sim­ply than Marx
    ’the indi­vid­ual cap­i­tal­ist can only sur­vive if he strives con­tin­u­ally not sim­ply to keep pace with his com­peti­tors, but to out­strip them; and he can do this only if he suc­ceeds in rais­ing his profit above the aver­age, thus achiev­ing an extra profit…This result is assured by the com­pe­ti­tion of cap­i­tals for spheres of invest­ment, by the con­stant influx of cap­i­tal into those spheres with above aver­age rates of profit, and by its with­drawal from those spheres where the rate of profit is below average. ’

    @Danny2B

    Banks his­tor­i­cally have been beset by herd mentality’

    Of course but that is a sys­temic phe­nom­e­non not one explain­able by strong method­olog­i­cal individualism/reductionism

    Cap­i­tal flows to finan­cial inter­me­di­aries due to inter­est, loan repay­ments to a large extent.’

    The inter­est has to be com­pet­i­tive with the rate of profit in the pro­duc­tive econ­omy, if it is much lower then it would be irra­tional for any­one to invest in finance cap­i­tal. If the rate of profit in the pro­duc­tive econ­omy is lower over any con­sid­er­able period prof­its will fall due to lack of invest­ment and then prof­its in finance cap­i­tal will fall.

  16. Dannyb2b says:

    Of course but that is a sys­temic phe­nom­e­non not one explain­able by strong method­olog­i­cal individualism/reductionism”

    So you agree with me now? The sys­temic phe­nom­e­non is man­i­fest­ing itself because of an imbal­ance. This imbal­ance is that some pri­vate profit ori­ented enti­ties cre­ate money and some don’t. Too few enti­ties (the ones cre­at­ing the money) mak­ing deci­sions for an entire econ­omy means poor allo­ca­tion of resources because of a lim­ited capac­ity to ana­lyze and man­age the envi­ron­ment effectively.

    A bal­anced sys­tem is one where all enti­ties oper­ate on a level field and a greater num­ber of enti­ties are involved in the lend­ing and invest­ment process. More minds at work equals bet­ter decisions.

  17. NeilW says:

    Because CEOs that aim at that tar­get get fired, as do soc­cer man­agers, and investors get wiped out in the long run as there invest­ments no longer act as a store of value in real terms.”

    No they don’t.

    The vast major­ity of busi­nesses are run on a good enough basis doing just enough to avoid boats being rocked.

  18. LCTesla says:

    Aus­tralian cities are well rep­re­sented among the “world’s most expen­sive cities” accord­ing to this analysis:

    http://www.ritholtz.com/blog/wp-content/uploads/2012/05/most-expensive-cities.png

    http://www.ritholtz.com/blog/2012/05/global-real-estate-bubble/

  19. alainton says:

    @NeilW

    The vast major­ity of busi­nesses are SMEs or other pri­vately held firms with­out share­hold­ers and only they can afford to sur­vive at below aver­age profit rates for any con­sid­er­able length of time, and not if they are debtors as they will then need to pay a com­pet­i­tive inter­est rate (again Hil­fer­d­ing was good on how dif­fer­ent rules on profit rates apply to dif­fer­ent seg­ments of the economy).

    Why should any­one ratio­nally invest in a firm that makes sig­nif­i­cantly below aver­age profit rates, unless the rate of profit is higher than the rate of infla­tion, as the value of the invest­ment will erode over time, it would be bet­ter invest­ing on bonds or keep­ing it in the bank.

  20. mikeh1980 says:

    @Lyonwiss

    This began when I found your claim that the US gov­ern­ment was sup­press­ing the gold price astound­ing and sought evi­dence from you. You’ve made some wild asser­tions but noth­ing close to being evi­dence. You’ve ref­er­enced a tin foil hat blog, claimed I am unaware about a revolv­ing door between gov­ern­ment and the finan­cial sec­tor, claimed I am emo­tional about gold and so on. None of this con­sti­tutes evi­dence that the US is sup­press­ing the gold price. It reads as ran­dom hand wav­ing intended to obscure a lack of any infor­ma­tion to sup­port your emo­tional beliefs.

    Take your infor­ma­tion to all the insti­tu­tions that are long gold so they can ini­ti­ate a class action against the con­spir­a­tors sup­press­ing the gold price.

  21. Lyonwiss says:

    @ Mikeh1980 May 8, 2012 at 9:39 am

    Cen­tral banks are long gold. They are unlikely to ini­ti­ate class action against themselves.

  22. Lyonwiss says:

    @ Mikeh1980 May 8, 2012 at 9:39 am

    Also, I find it amaz­ing that you can­not take a hint and find things out for your­self. Who are you that I need to con­vince you or edu­cate you? What have you brought to the con­ver­sa­tion? Noth­ing, not even a “a tin foil hat blog”. I will stop here.

  23. mikeh1980 says:

    @Lyonwiss

    Cen­tral banks are long gold. They are unlikely to ini­ti­ate class action against themselves.”

    And what of oth­ers long gold? Gold ETFs and so on. Don’t you think that if any cred­i­ble evi­dence existed of the gold price being sup­pressed that they would have an inter­est in that?

    Also, I find it amaz­ing that you can­not take a hint and find things out for your­self. Who are you that I need to con­vince you or edu­cate you? What have you brought to the con­ver­sa­tion? Noth­ing, not even a “a tin foil hat blog”. I will stop here.”

    I came across your astound­ing claim — it stood out in this con­ver­sa­tion amidst a mea­sured debate by oth­ers about banks and money — and asked you for evi­dence. All you do is respond with con­de­scend­ing remarks (but noth­ing that can sup­port your claim). Now instead of pro­vid­ing evi­dence to sup­port your asser­tion you ask me to find things out for myself. Do you expect any­one to take you seri­ously when you post stuff like this?

  24. Lyonwiss says:

    @ Mikeh1980 May 8, 2012 at 11:39 am

    You have added noth­ing fac­tual to this con­ver­sa­tion. Please terminate.

  25. mikeh1980 says:

    @Lyonwiss

    Your last com­ment (May 8, 2012 at 12:31 pm) is quite ironic. It was your absence of facts that led me to com­ment in the first place. i.e. I asked you what evi­dence, a.k.a. facts, you had to sup­port your asser­tions about the US gov­ern­ment sup­press­ing the gold price.

    If this US gov­ern­ment action was real rather than in your imag­i­na­tion I’m sure some evi­dence would have been forth­com­ing by now — and no doubt gold longs would be up in arms. I agree we should ter­mi­nate — before the US gov­ern­ment get wind of your exposé and send in the black helicopters.

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