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  • Tidal Report – 15 May 2010 – Europe crumbles; budget stumbles : third wave group
    January goes The view from Burj Dubai In Australia fear and panic could describe the recent political actions of the Rudd government Having received an enormous amount of criticism over the past month or so for policy backflips wasteful spending and general incompetence the government hoped its no frills budget released on Tuesday would help steady the political ship Unfortunately for Kevin Rudd the budget has disappointed many political and economic commentators It is obvious that the most important thing the government wanted to deliver in this budget was a surplus in the forecast period to demonstrate their fiscal conservatism and attempt to restore some economic credibility They succeeded in the former and show the budget returning to surplus in 3 years time The mechanisms used by Rudd and Swan to achieve this outcome are unfortunately widely being seen as disingenuous Terry McCrann writing in the The Weekend Australian Swan s big fiscal fiddle explains that the government budget s path to surplus is based almost exclusively on creative accounting and overly optimistic economic forecasts He explains the creative accounting thus Every budget has its share of fiscal fiddles The ones in this budget are designed to first get to that surplus The second aim was to underwrite that by keeping a lid on spending Why did the government formally abandon its Emissions Trading Scheme just before the budget Why has it yet to respond to the implementation study on the the national broadband network The answer rests at least in part in a simple budget convention numbers are only included in the budget when a policy decision has been taken Further and importantly they are included as soon as the decision like the RSPT is taken not when it s approved by parliament Then they stay included even when the policy decision has been rejected in parliament like the ETS provided it remains policy So the RSPT came into the budget and provided the revenue for the small surpluses projected in 2012 13 and 2013 14 If the government had instead unveiled a proposal open for sensible discussion there would have been no RSPT revenues and no surpluses Rather unusually with the ETS we saw numbers taken out of the budget because a policy decision was undone Its formal abandonment Similarly with the NBN Here we do have a policy decision indeed we have policy implementation But what we don t have is the government s final response to the NBN implementation study which surfaced so close to the budget and left the government well no time to respond What s the import of this Well until the government gives its final response it doesn t have to include the full 26bn plus formally into budget spending Voila A surplus It is however the economic assumptions used in the budget that concern Terry the most On such are the dodgy numbers in this budget built The substance is more significant For the entire budget and the Australian economy rest

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-15-may-2010-europe-crumbles-budget-stumbes/ (2013-02-03)
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  • Article – Shock and awe may not be enough to save Europe : third wave group
    of the euro so high are the stakes The full article can be found here Shock and awe may not be enough to save Europe Category general posts Tags britain edmund conway europe global financial crisis sovereign debt Comments One Response to Article Shock and awe may not be enough to save Europe Peter Delibaltas says May 12 2010 at 11 25 am Shock and awe what a load of crap More debt to solve the debt problem I think its shocking and awful Reply Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece

    Original URL path: http://www.thirdwavegroup.com.au/general/article-shock-and-awe-may-not-be-enough-to-save-europe/ (2013-02-03)
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  • Video – Joe Saluzzi on CNBC : third wave group
    Themis Trading have been warning of for years The following clip from CNBC gives some insight into the current dynamics of the market and why those close to the coal face of trading are almost certain this will occur again Category general posts Tags high frequency trading joe saluzzi stockmarket Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece interest rates international monetary fund ireland japan jim chanos karl denninger kevin rudd leith van onselen louis christopher market history mike shedlock oecd psychology real estate recession robert prechter sentiment sovereign debt steve keen stimulus

    Original URL path: http://www.thirdwavegroup.com.au/general/video-joe-saluzzi-on-cnbc/ (2013-02-03)
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  • Tidal Report – 8 May 2010 – Our fragile markets : third wave group
    see clarity in this situation What is really inflaming the passion of miners and commentators alike however is the government s obvious demonstration of political opportunism There is a real sense of a breach of faith between the government and the mining industry For those interested in the behind the scenes politics leading up to the announcement Matthew Stevens has an excellent article in The Weekend Australian Saviours in a crisis feel sold down the river The bigger concern of course is that booms are always followed by busts economic cycles 101 The Australian resource sector has been a huge beneficiary of Chinese stimulus spending This cannot continue indefinitely and in fact more and more commentators and analysts are recognising that the Chinese growth story is unsustainable and is fast approaching the end game China on a treadmill to hell China Sceptics come out to Play Terry McCrann as only Terry can puts it this way KEVIN the Gougher Rudd s resources rent tax is an exquisitely dreadful policy idea The RRT was exquisitely badly timed coinciding with the Greek meltdown and a Wall Street trader accidentally proving the truth of the saying that a billion isn t a billion any more especially when you meant it to be a mere million Even if the cocktail of past Grecian greed and contemporary Wall Street incompetence shows that in Rudd s own words the global financial crisis was not yet over what on earth is he doing proposing a policy that doesn t just assume it s over but that we are embarked on another boom On the other hand it would pay the Prime Minister to look at a speech delivered by Reserve Bank deputy governor Ric Battellino in February charting our commodity booms over the past 150 or so years There s one simple message every boom is followed by a bust an immediate bust This time it might be different That China will sustain a never ending commodity boom Even without looking at the specific tensions and challenges in that country today and the unlikelihood that the Chinese are somehow smarter than all the previous economic super masters before them the Japanese the Germans indeed the Americans I suggest that is unlikely Yet we now have a prime minister assuming it will be so and seeking to pocket the proceeds before they ve been well dug up The resource heavy Australian stockmarket didn t like the news and took a pummelling this week with the All Ordinaries down nearly 7 per cent Not that it was Kevin and Wayne s fault entirely world indices had a torrid time as well contributing to the weak performance of our markets The negative mood of investors this week was blamed on the escalating European specifically Greek debt crisis As our readers would know this is hardly a new issue Sovereign Debt Crisis As January Goes The View from Burj Dubai An announcement by the European Central Bank that it would take

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-8-may-2010-our-fragile-markets/ (2013-02-03)
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  • Article – The Rudd mining grab : third wave group
    their goods As Rio Tinto recently discovered the political risks of selling to countries like China are high too Charlie Aitken of Southern Cross Equities was far more forthright in his hostility to the tax in a recent newsletter to his subscribers I am finding it quite difficult to express in words exactly how disappointed despondent I am with the Rudd Government s management of the Australian economy and in turn the perception of Australian assets they have created in a global investment context It nearly brings me to tears because it is absolutely against everything I believe in and have worked for over the years raising capital for Australian projects promoting Australian investments promoting foreign investments etc I am watching Australia being de rated before my eyes It s a disgrace it is avoidable but it s happening It s like watching a bus crash which I had a premonition of yet in which I am a passenger It is hard to disagree with either of those sentiments particularly when the suspicion can be fairly raised that the funds are being used to fill a budgetary hole brought about by wasteful spending Stimulus what is it good for Category general posts Tags australia charlie aitken commodities kevin rudd super profits tax Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud

    Original URL path: http://www.thirdwavegroup.com.au/general/article-the-rudd-mining-grab/ (2013-02-03)
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  • We’ve made some changes . . . : third wave group
    t worry there s nothing you need to do We ve decided to move to a blog which will not only include our formal weekly Tidal Report but also ad hoc articles interviews and videos This will allow us to alert readers to items of interest in a timely manner and also let readers have their say by posting comments To make the transition as seamless as possible as a current Tidal Report subscriber you have been automatically moved to the new system and will receive an email alert similar to this one whenever we post new content on our website If you wish to unsubscribe however you can do so using the link at the bottom of this email We are very excited about the improvements to our website and information access We hope you enjoy them Regards Third Wave Group team Link to website Link to blog page Link to rss feed Category general posts Tags administration Leave A Comment Click here to cancel reply Name required Mail will not be published required Website subscribe Have our blog posts delivered straight to your inbox categories general posts tidal reports latest posts The story silver tells Is the end game in sight for Greece Descending the Slope of Hope Australia s sugar daddy stalling What housing undersupply Australian banks vulnerable still Chicken or egg the unemployment effect The recovery that isn t McKibbin you ve done it again What does this chart tell you tag cloud alan kohler australia banks ben bernanke britain china commodities currency debt deflation deleveraging demographia report economy employment europe first home owners global financial crisis great depression greece interest rates international monetary fund ireland japan jim chanos karl denninger kevin rudd leith van onselen louis christopher market history mike shedlock oecd psychology real estate

    Original URL path: http://www.thirdwavegroup.com.au/general/weve-made-some-changes/ (2013-02-03)
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  • Tidal Report – 1 May 2010 – The Case Against Australia : third wave group
    It will have an effect on credit and equity markets but it is credit markets that matter here It will widen spreads If we re lucky there will be a greater difference between AAA sovereigns and a rogue sovereign like Greece That is how the market should work But the danger here is everyone being tarred by the same brush where good risk is priced purely on the back of concern and paranoia from the markets Ralph Norris CEO of Commonwealth Bank was another of our bank executives to express concerns that European debt problems will affect the pricing and availability of wholesale funding for Australian banks Obviously volatility in markets is something that has happened on a regular basis over the last two to three years and this is another incident So certainly it will have a potential impact on pricing and availability in the short term but we don t see it impacting us at this point The days of paying 13 to 15 basis points over the swap rate to borrow funds internationally are gone I don t think we are going to get back to those levels any time soon Category tidal reports Tags australia currency damien cleusix economy foreign debt mike smith ralph norris real estate Comments 3 Responses to Tidal Report 1 May 2010 The Case Against Australia michael matusik says June 23 2010 at 2 53 pm Well another has joined Professor Steve Keen in claiming that it is only a matter of time before the Australian housing market crashes The new voice is from the co founder of global management firm GMO Jeremy Grantham Jeremy however has some form when it comes to predictions as he correctly called the GFC a year or so before it happened So is Jeremy and Steve correct when it comes to houses downunder Jeremy Grantham believes that Australia is in an unmistakable housing bubble and that prices would need to come down by over 40 to return to the long term trend According to Jeremy the price of housing typically trades at about 3 5 times that of family income and in a bubble it goes beyond six The average price of an Australian house at present according to Jeremy is running at 7 5 times the average gross household income¹ This means again according to the GMO head that prices here are twice as expensive as they should be I repeat twice TWICE Now we have been saying for sometime that the housing market is likely to soften in coming months We might even see house prices fall a bit and particularly at the bottom end if interest rates rise again too soon Over the medium term planning for a plateauing in sales volumes rents and end prices might be the more prudent approach Looking long the next decade could be more subdued that the noughties with nominal residential values remaining largely flat until affordability is rebuilt by a combination of gradual increases in household

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-1-may-2010-the-case-against-australia/ (2013-02-03)
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  • Tidal Report – 24 Apr 2010 – Our Passionate Economist : third wave group
    turned to how Australia s property market was going to react Keen observed that Japanese property prices had fallen 40 per cent after their 1990s bubble burst and could see no reason why we should be any different over a similar time frame of ten to fifteen years Keen used the walk which he called Walking Against Australia s Property Mania to further publicise his views that Australia s property prices are unsustainable and that it has only been short term government programs such as the First Home Owners Grant and Boost that has allowed property prices to remain so inflated Though there are many factors behind this bubble primarily the role of the finance sector as a promoter of speculative behaviour Government policy was also complicit Without The Boost the reduction in mortgage debt levels that was in train in late 2008 would have reduced expenditure in the economy by roughly 3 per cent of GDP Instead the Boost enticed households into a dramatic 6 per cent increase in mortgage debt during 2009 This effective 9 per cent turnaround in debt levels is a major reason why Australia has avoided the worst consequences of the GFC to date The Boost has also given Australia a dubious distinction when compared to the rest of the OECD Yes we are the only country that avoided a technical recession but we are also the only country where debt levels are rising once more compared to GDP rather than falling This is the classic hair of the dog cure for a hangover avoid the consequences of drinking too much one night by getting drunk again the next morning It worked in the 1970s and 1990s because debt levels were substantially lower than today 45 per cent in the 1970s 90 per cent in the 1990s over 150 per cent today and because there was another group to whom lending could occur However now both households and businesses are carrying record levels of debt and businesses are still rapidly deleveraging while mortgages are the only source of rising debt I don t believe that the hair of the dog will work this third time instead debt growth will falter once the impact of The Boost wears off and Australia will feel the painful effects of debt deleveraging I expect this will renew the fall in Australian house prices that The Boost interrupted What is probably most instructive are the graphs Keen chose to use on the t shirts he wore on the walk picking three messages he felt typified the brewing trouble Australia is in Design No 1 highlights the impact of the First Home Buyers Grant over the last 30 years It was first introduced in 1983 by the Hawke Labor Government then expanded in 1988 as a way of boosting the economy when it was feared that the economy could enter a recession It was reincarnated by Howard in 2000 as a temporary boost to help the housing sector adjust to the

    Original URL path: http://www.thirdwavegroup.com.au/tidal-report/tidal-report-24-apr-2010-our-passionate-economist/ (2013-02-03)
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